2014-03-19 14:12:01 -
3W Power S.A. (FWB:3W9) (ISIN LU0953526265, 3W9), the holding company of AEG Power Solutions B.V. (AEG PS), a global provider of power electronics systems and solutions for industrial power supplies and renewable energy applications, has agreed with major creditors of its EUR100 million corporate bond (ISIN DE000A1A29T7, 3W9A) essential economic principles of restructuring of its bond. The agreement is subject to the required approval of the upcoming bondholders’ meetings.
The Company calls for a bondholders’ meeting on Wednesday, April 9th 2014, to be held in Frankfurt am Main. In this meeting, the Management and Board of Directors of AEG PS will present the restructuring plan to all bondholders. The agenda to be discussed and to vote on at the meeting includes:1)
The approval of the restructuring plan;2) The appointment of Team Treuhand GmbH as common representative of the bond and to represent bondholders in connection with the implementation and execution of the bond restructuring.
The key elements of the restructuring plan are a debt-to-equity swap of 50 per cent of the outstanding bond nominal, the issuance of a new EUR 50 million bond, a cash capital increase by contribution of EUR4 million (rounded) with subscription rights by the current shareholders and the implementation of a comprehensive operational restructuring program. AEG PS proposes to bondholders to swap the bond nominal plus accrued interest into 90 per cent of the equity (contribution in kind) and a new bond to be issued with a nominal amount of EUR 50 million. The new bond will be secured and guaranteed by subsidiaries and benefit from substantially improved covenants. The new bond matures in 2019 and has an adjusted progressive interest rate with semi-annual coupon payments.
The principal institutional bondholders have pre-agreed to these terms.
With a successful financial restructuring of its corporate bond, there will be an improvement in the Company’s market competitiveness, ability to conduct day-to-day operations and positioning as a sustainable German “Mittelstand” company. Specifically, full coverage by credit insurers, access to bank guarantees, participation in project negotiations and offers, and normalization of payment terms will be re-established.
Without financial restructuring, AEG PS is at risk of running out of required operational funds in the course of this year. Management believes that this would likely lead to a liquidation of the whole group near year end. Liquidation would generate only little value for the bondholders, estimated to be in a range of 10 – 15 per cent repayment quota. The quota estimate is based on internal and external third party analyses.
AEG PS will perform a cash capital increase. Current shareholders will have subscription rights to new shares for a total consideration of EUR4 million (rounded) and AEG PS will endeavour to place those shares, not subscribed via subscription rights, for the same issue price to third parties. Furthermore, AEG PS will implement a management incentive program focused on the sustainable improvement of equity value and, therefore, bondholders’ recovery. Shareholders will vote on the restructuring plan as soon as bondholders approved the plan and the decision is executable. After dilution, bondholders will retain 60% of the equity. The Board of Directors of the Company and major shareholders fully support the financial restructuring.
In addition to the financial restructuring, Management and the Board of Directors developed a comprehensive catalogue of measures which stabilizes the operational business of AEG PS, aids profitability through substantial cost reductions, and enables AEG PS to focus on its core areas of competitive advantage. The operational restructuring plan includes certain discontinuations or divestitures of unprofitable activities and subsidiaries, the divestiture of profitable subsidiaries that are not strategic, the delayering of complex legal and operational structures, and the structured development of certain growth opportunities. AEG PS will substantially reduce its workforce in production as well as overhead functions. First restructuring measures like the discontinuation of the subsidiary in Lannion this January as well as the agreement to a workforce reduction by 160 employees in Warstein-Belecke this March have already been implemented.
When the actions are completed, AEG PS will be a more focused power electronics company providing mission critical industrial and commercial uninterruptable power supply solutions and services. The company will further develop and market advanced power electronics systems and solutions utilizing its unique combination of decades of experience and market leading technology in the fields of power control and power conversion.
The financial outlook for the Group is expected to improve after the implementation of the financial and operational restructuring program.
Management forecasts revenues of EUR219 million in 2014, EUR224 million in 2015 and above EUR240 million in 2016. EBITDA (after extraordinary expenses) is expected to increase from an anticipated minus EUR24 million in 2014 to a positive EUR17 million in 2015 and above EUR20 million thereafter. Anticipating a successful financial and operational restructuring, AEG PS expects to generate a positive operating free cash flow after debt service. At the end of fiscal year 2014 the Company expects to have liquidity of approximately EUR20 million. Most of this cash is collateral locked up in the operating subsidiaries and necessary for conducting daily operations. Total workforce after layoffs and divestitures will be down to circa 900 compared to 1,521 by year-end 2013.
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About 3W Power/AEG Power Solutions:3W Power S.A. (WKN A1W2L4 / ISIN LU0953526265), based in Luxembourg, is the holding company of AEG Power Solutions Group. The Group is headquartered in Zwanenburg in the Netherlands. The shares of 3W Power are admitted to trading on Frankfurt Stock Exchange (ticker symbol: 3W9).AEG Power Solutions (AEG PS) Group is a global provider of power electronics systems and solutions for all industrial and demanding commercial power requirements offering one of the most comprehensive product and service portfolios in the area of uninterruptible power supply and power management.Thanks to its distinctive expertise bridging both AC and DC power technologies and spanning the worlds of both conventional and renewable energy, the company creates innovative solutions for next generation distributed power generation
For more information, visit www.aegps.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
This communication does not constitute an offer or the solicitation of an offer to buy, sell or exchange any securities of 3W Power. This communication contains forward-looking statements which include, inter alia, statements expressing our expectations, intentions, projections, estimates, and assumptions. These forward-looking statements are based on the reasonable evaluation and opinion of the management but are subject to risks and uncertainties which are beyond the control of 3W Power and, as a general rule, difficult to predict. The management and the company cannot and do not, under any circumstances, guarantee future results or performance of 3W Power and the actual results of 3W Power may materially differ from the information expressed or implied in the forward-looking statements. As a result, investors are cautioned against relying on the forward-looking statements contained herein as a basis for their investment decisions regarding 3W Power.3W Power undertakes no obligation to update or revise any forward-looking statement contained herein.
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