Gelsenkirchen, 28 June 2010. Masterflex AG and its financing partners have agreed on an arrangement for restructuring the Group's financing over the long term. Implementation is subject to the customary Board and bank syndicate approvals and involves a prolongation of the current financing agreements for implementing this arrangement until 30 December 2010. The main components are:
- Significant reduction of the current number of lenders by seven banks, to a future total of six banks.
- Repayment of the seven departing banks with a current claim volume of around EUR 25 million through the end of 2010, involving a waiver of around EUR 10 million in claims which will be recognised under profit and loss.
- Provision of structured, long-term (5-year) external financing for the Group by the remaining banks (core banks) in exchange for guarantees concerning the following key conditions:
- Granting of a state guarantee for a portion of the restructured loans (the application process is underway)
- Successful injection of new liquidity and steps to strengthen equity
The company will also pass a major milestone in terms of restructuring its operations by reporting the Advanced Material Design segment (surface technology) as a 'discontinued business unit' effective 30 June 2010, as the Executive Board expects to dispose of this segment before the end of this year. This will entail a deconsolidation expense of approximately EUR 5 million and will affect both Masterflex AG's consolidated profit and loss and its consolidated equity, as already noted in the Annual Report. Disposal of the loss-making surface technology unit represents another major step by Masterflex AG towards focusing on its successful High-Tech Hose Systems core business.
The planned comprehensive financial restructuring is based on several interrelated components. Given the highly complex, reciprocal conditions and the large number of banks involved, the Executive Board notes that negotiations are still ongoing and that the company's future development therefore is still fraught with uncertainties.
With respect to steps to strengthen equity, several anchor investors have already indicated that they are prepared to take equity stakes in Masterflex AG when the financing arrangement is implemented and have signed letters of intent to that effect to guarantee the successful execution of a capital measure.
The company will discuss the structure of the planned capital measure in the invitation to the general shareholders' meeting on 17 August 2010.
Successful implementation of this extensive financing arrangement will ensure the long-term restructuring of Group financing announced by the Executive Board and will contribute to further substantial de-leveraging of the Group.