On June 30, the company announced that it cannot honor its contractual obligation in full with regards to its current credit facilities. Elcoteq also announced new plans to restructure the company’s finances with Platinum Equity. Platinum’s investment will require due diligence process expected to be completed at the end of July and co-operation from the company’s creditors, which now looks pretty compromised. Platinum is negotiating to become the largest shareholder in the company with ownership staying under the mandatory bid threshold. There is also a further 80 million EUR debt financing in the talks. The financing would most likely stabilize the company’s finances, but now that indirect effects of bankruptcy proceedings are in full gear, it remains to be seen whether Platinum wants to commit to this company. If this round of refinancing falls apart, Elcoteq is gone.
And in early August:
I said earlier that they are finished if Platinum balks and with economy heading further south, I will stick to that statement.
Today, the company filed for bankruptcy. The Finnish subsidiaries of Elcoteq filed for bankruptcy already earlier.
Stock Exchange Release
October 6, 2011 at 17.15 (EET)
Elcoteq SE has today filed for bankruptcy in Luxembourg. During the last months, the Company had entered into discussions with the revolving credit facility lenders as well as the Company’s key customers in an attempt to save the Company. Despite of the Company’s continuous cost reduction measures and thorough efforts to restructure the Company’s debt, Elcoteq was unfortunately not able to find a solution that would have been acceptable to the revolving credit facility lenders. The proposal for a recovery plan set forth jointly by Elcoteq and its key customers was rejected by the lenders, who required the Company’s customers to waive their rights and increase their exposure instead. Approximately 15% of the original 230 million euro revolving credit facility remains outstanding. The lenders continued their enforcement actions against the Company by freezing the Company’s bank accounts, by preventing the Company’s payment transactions as well as by preventing the accounts receivable to be paid to the Company. As a consequence, Elcoteq SE is no longer able to continue its operations and there are no longer any prerequisites for the Company to continue the controlled management procedure in Luxembourg. Hence, the Company was forced to file for bankruptcy.
And here is the latest balance sheet from June 30th:
And equity (the lack of) and liabilities:
Assets at 294,4 million and liabilities at 276 million euros. PPE+intangibles+inventories at around 127 million euros. These will be worth somewhat less. And considering the cash flow before financing for H1 was -24.5 million, there are going to be losses on this one in addition to the 8000 employees now looking for work somewhere else.
Bankruptcies among Finnish listed companies have been pretty rare and Elcoteq is even a rather large company to go under.
And here are the shareholders who now have nothing. I just don’t understand why one would have added more shares lately. Personal choice…