Pfleiderer shareholders approve capital cut and capital increase

Jul 22, 2011. /Lesprom Network/. The shareholders of Pfleiderer AG at shareholders’ meeting approved with a 93.3 % majority a capital cut and a subsequent capital increase of up to Euro 100 million. 44.2 % of share capital was represented at the shareholders’ meeting. The shareholders’ approval was a prerequisite for implementing the restructuring concept presented in May, which aims to relieve debt and institute a series of measures to reorganize the company’s operations, as the company said in a press release received by Lesprom Network. As a result of the capital cut, shareholders will initially retain only around 0.8 % of current equity. In return, they will have the opportunity to increase this share to about 16% by way of a capital increase. The Group’s financial restructuring remains on schedule with this move. As part of the restructuring initiative, creditors had agreed to waive their claims, with the waiver being conditional to both the bondholders and shareholders’ approval of the restructuring plan and to the implementation of the projected capital increase of Pfleiderer AG. The holders of the hybrid bond issued in 2007 at a nominal value of Euro 275 million had already agreed in June to waive their claims in full. This waiver is tantamount to some Euro 330 million in debt relief for the Pfleiderer Group. In return for this waiver, bondholders will be entitled to acquire up to 4% of Pfleiderer AG’s equity after the planned capital increase has been carried out. Hans H. Overdiek, CEO of Pfleiderer AG, notes, “Today’s decision marks the return of brighter prospects for our customers and the more than 5,000 employees of our company. We had gained the support of financial creditors and hybrid bondholders earlier on; now our shareholders also support the proposed restructuring plan.” Important objectives have already been achieved with the operational restructuring effort: As previously announced, the Nidda plant was shut down at the end of June 2011. The closure of the Gschwend, Ebersdorf and Nidda factories, a part of the agreed restructuring plan, aimed to reduce overcapacity in the market and better utilize the remaining factories. Key points of the financial restructuring: The plan calls for creditors to waive their claims to the Group’s financial liabilities in the amount 40% of their receivables, including part of the accumulated interest and fees. The total amount comes around Euro 380 million. Furthermore, the creditors provided to the company in May 2011 an additional credit line of Euro 100 million in the form of a first-lien secured loan. Half of this loan is to be repaid after the capital measures have been carried out. As a result of the capital cut approved today, shareholders will initially retain only around 0.8% of current equity. However, they have the option of increasing their share of equity by up to 15%, from 0.8 % to up to around 16% by subscribing to their allotted share of the capital increase against a cash contribution of up to Euro 40 million. To restore a sound equity base, the plan calls for a cash capital increase to raise up to Euro 100 million. Certain senior secured creditors are to raise Euro 60 million of this figure, and up to Euro 40 million are to be financed by the shareholders of Pfleiderer AG or other third parties. The financial creditors are also prepared to provide a further senior secured credit of up to Euro 40 million to cover that part of the capital increase which is not raised by the shareholders or other third parties. The planned injection of up to Euro 100 million is therefore guaranteed in any event. Creditors who participate in the cash capital increase are to hold, upon its completion, at least 80% of Pfleiderer AG’s increased equity. This percentage may increase to the extent that neither the current shareholders nor third parties subscribe to their allotted shares in the capital increase. The majority situation will reflect both the creditors’ significant waiver of claims to receivables and their guaranteed cash injection of up to a further Euro 40 million. The implementation of the restructuring plan is expected to continue well into the second half of 2011, and possibly into the 1Q 2012. The Pfleiderer Group is one of the worldwide leading manufacturers of engineered wood, surface finished products and laminate flooring.