Pfleiderer appoints Horst Piepenburg as temporary custodian, expects proposed financial restructuring through insolvency plan to lead to 'substantial debt relief'
Wendy Lisney
DUESSELDORF, Germany
,
March 28, 2012
(press release)
–
The Executive Board of Pfleiderer AG today filed a request to open insolvency proceedings with the relevant Court in Düsseldorf. This became necessary as on March 27, 2012, the Higher Regional Court, Frankfurt/Main, rejected the application for release related to the lawsuits against the resolutions adopted by the meeting of bond creditors on June 20, 2011. As a result, the resolutions regarding the planned capital measures adopted with a large majority of votes cannot be implemented in time. The debt relief and recapitalization of the company that had been planned within the scope of the restructuring plan is now no longer possible by this means.
The Executive Board now plans to implement the financial restructuring by way of an insolvency plan, which allows for a timely and legally binding implementation of the restructuring measures and will lead to a substantial debt relief of Pfleiderer AG, as originally planned. The Executive Board will act as debtor in possession; this will allow the Executive Board to continue to manage the business and to complete the ongoing restructuring under the supervision of a custodian. Today at 5 pm, following a unanimous proposal by a previously appointed creditor committee the Court appointed Horst Piepenburg as temporary custodian.
The insolvency does only affect Pfleiderer AG as the holding company but not the operational subsidiaries that are organizationally and financially independent from the holding. As a result, the operating business and the related jobs will not be affected by the insolvency of the AG. Pfleiderer AG currently has 10 employees, Pfleiderer Group currently has about 4,900 employees (including the operations in North America that are for sale), of which more than 2,000 employees are in Germany.
Hans-Joachim Ziems, member of the Executive Board who is in charge of the Group’s restructuring among his other responsibilities, commented: “I regret that we were not able to implement the original restructuring resolutions despite the high level of approval among the parties involved and that therefore, the existing shareholders and bond creditors can no longer participate in the successful restructuring of Pfleiderer. We will now continue with our restructuring by way of an insolvency plan. Pfleiderer is well prepared for this situation. In particular, the so-called debtor in possession approach or self-administration is good news for our employees as it will enable us to complete the restructuring that is already well underway and led to positive operational results without any further delay.”
Lawyer Piepenburg commenced work in the new role immediately on Wednesday evening „The insolvency provides ample opportunity to maintain Pfleiderer AG as a holding company. With the restructuring commitments that were made previously an insolvency plan can be implemented very quickly.”
Background information: In the past year, Pfleiderer AG developed a comprehensive restructuring plan, on the basis of which the company would have had much of its debt waived and would have been recapitalized. The prerequisite for the implementation of this plan was an agreement by all parties involved -lenders, shareholders, and hybrid bond creditors - to make significant contributions. The financing banks and investors had agreed to waive a substantial portion of their outstanding receivables and to make new financial resources available, however, with the proviso that the shareholders agree to a drastic reduction of the company’s capital and to a subsequent capital increase. The hybrid bond creditors were supposed to waive their claims under the bond completely and, as a quid pro quo, receive a share of the recapitalized company. This was set in motion with the successful conclusion of a Creditors’ Meeting and an Extraordinary General Meeting last year. However, after individual investors had brought lawsuits against the resolutions, they could no longer be implemented as planned. Despite the ongoing principal proceedings, the company attempted to enable a legally effective entry of the resolutions by instituting release proceedings. However, this endeavor failed due to its rejection by the Higher Regional Court, Frankfurt. Now the restructuring of Pfleiderer will be ensured by way of an insolvency restructuring procedure where the Executive Board acts as debtor in possession.
In addition to the capital measures, the company had proposed a number of operational restructuring measures within the scope of the restructuring plan and had largely already implemented them. Pfleiderer made significant progress in this process; for example, the operational restructuring in Western Europe was to a large extent already completed last year. The planned disposal of the North American operations also saw an important partial success with the sale of the plant in Moncure, NC (USA) in late 2011.
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