Inside information disclosure pursuant to Art. 17 of the Market Abuse Regulation 596/2014
Ad-hoc 3W Power / AEG Power Solutions:
- 3W Power reaches agreement with key stakeholders and will proceed with holistic balance sheet restructuring
- Third-party expert validates business planning and restructuring measures in restructuring opinion
December 11, 2017, Luxembourg / Zwanenburg, The Netherlands. 3W Power S.A. (ISIN LU1072910919, 3W9K), the holding company of AEG Power Solutions Group, has reached an agreement on the implementation of a holistic balance sheet restructuring with major institutional holders of notes under its secured bond (ISIN: DE000A1ZJZB9) and convertible bond (ISIN: DE000A1Z9U50), with lenders under its super senior loan in the amount of EUR 20m (including the bridge facility recently borrowed in the amount of EUR 5m) as well as with major shareholders. The board of directors already approved the agreement. The restructuring is now subject to formal approval of bondholders and shareholders and meetings will be called for the various investor groups. There is formal agreement with key members of each group to support the restructuring, securing voting rights representing 100% (super senior loan), 75% (convertible bond), 36% (secured bond) and 30.3% (shares), respectively.
The restructuring plan contains the following key terms and conditions:
- Share capital:
The existing share capital of the company in the amount of EUR 837,037.03 (divided into 83,703,703 shares) shall be reduced to zero. The reduction to zero will result in a cold delisting of the company and its shares ipso iure. Subsequently, it is intended to increase the share capital by way of cash increase up to an amount of EUR 7,970,787 by issuance of up to 7,970,787 shares with a nominal amount of EUR 1 each, while preferential subscription rights of shareholders shall be excluded. Contractual option rights to participate in the cash increase will be vested in noteholders of the company’s secured bond (up to 6,610,807 new shares; equals 82.94% (rounded)) and convertible bond (up to 959,980 new shares; equals 12.04% (rounded)) as well as - presumably with a minimum investment commitment threshold of EUR 100,000 per investor - to shareholders (up to 400,000 new shares; equals 5.02% (rounded)).
- New shares:
It is not intended that the new shares will be listed on any market (whether regulated, open or other). The articles of association shall be amended to inter alia include stipulations on rights of first refusal and drag and tag along rights.
- Use of cash proceeds:
The proceeds from the cash increase shall be predominantly used to repay the EUR 5m bridge facility. The surplus will be used for transactional costs and operational financing of new projects. To secure the full cash increase amount, the company achieved to retain a commitment from institutional investors to subscribe to any rump shares not acquired by option right holders under a non-exclusive back-stop undertaking.
- Secured bond:
The principal amount per note will be reduced from EUR 500 (plus any accrued and capitalized interest) to EUR 5. Each note will be vested with option rights to participate in the cash increase and to subscribe to 73 shares plus up to a maximum of 200 additional rump shares, not subscribed by other noteholders, against payment of a subscription price of EUR 1 per new share. Any noteholder actively exercising the option rights waives its claim to receive the reduced principal amount for the note the exercised option rights are attached to. Noteholders not actively exercising the option rights will receive prepayment of the reduced principal amount for the relevant note promptly after expiration of the option exercise period. Until then, no interest accrues on the reduced principal amount.
- Convertible bond:
The convertible bond will be restructured in a similar way to the secured bond. The principal amount per note will be reduced from EUR 100,000 (plus any accrued and capitalized interest) to EUR 100 and each note will be vested with option rights to 6,857 shares plus up to a maximum of 13,500 additional rump shares against payment of a subscription price of EUR 1 per new share.
- Super senior loan:
The super senior loan – after the envisaged repayment of the bridge facility – amounting to EUR 15m shall be extended until January 2021, interest shall be reduced from a fixed interest rate of 9.5% to a EURIBOR rate plus a margin of 450 basis points p.a. and a “pay as you can”-concept shall be introduced with regard to such reduced interest payments.
- Anticipated timeline:
The board of directors assumes that by the end of January 2018 the required approvals of bondholders of both corporate bonds can be provided in tandem. Subsequently, it is intended that an extraordinary shareholder meeting approves the restructuring plan. Once all bondholder and shareholder approvals are granted, the option exercise period and, thereafter, the prepayment of the reduced principal amount of the two corporate bonds will follow. The board of directors presently assumes that closing of the financial restructuring shall take place in the period from March to June 2018 and that invitations to bondholder votings will be published prior to Christmas 2017.
A third-party expert has validated the company’s business planning and restructuring plan and concluded that, after and subject to the implementation of the intended balance-sheet restructuring, further operational restructuring measures and a regain of customer confidence resulting in growth of sales, the company is able to resume sustainable profitability and competitiveness. Accordingly, a conservative case set forth in the underlying restructuring opinion which - assessing and integrating the effects of expected growth in sales, further cost savings from additional operational restructuring measures as well as the financial restructuring plan – shows: (i) for FY 2018 a positive operating profit (EUR 1m) together with positive equity (EUR 29.3m) but still a negative net income (minus EUR 2.1m); (ii) the complete turnaround in FY 2019 with an operating profit of EUR 4.9m and a positive net income of EUR 2m; and (iii) for FY 2020 an operating profit of EUR 7.7m with a positive net income of EUR 4.7m.
-- End of Announcement --
About 3W Power:
3W Power S.A. (WKN A114Z9 / ISIN LU1072910919), 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: 3W9K). AEG Power Solutions is a leading provider of UPS systems and power electronic solutions for industrial, commercial, renewable and distributed energy markets throughout the world with main sites in France, Spain, Germany, Singapore and China, with further direct 14 sales and service offices worldwide.
For more information, visit www.aegps.com