Gelsenkirchen, Germany - Hose company Masterflex AG and its financing partners have agreed to restructure the Group's financing over the long term, subject to approval by its board and bank syndicates.
The main components of the arrangement 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 Euro 25 million through the end of 2010, involving a waiver of about Euro 10 million in claims which will be recognised under profit and loss.
- Provision of structured, long-term (5-year) external financing for Masterflex by the remaining core banks in exchange for guarantees concerning the following key conditions:
1. Granting of a state guarantee for a portion of the restructured loans (the application is underway); and
2. Successful injection of new liquidity and steps to strengthen equity.
Masterflex said it will 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. The company expects to dispose of this unit before the end of this year. This will entail a deconsolidation expense of about Euro 5 million and will affect both Masterflex AG's consolidated profit and loss and its consolidated equity.
Disposal of this loss-making unit is a major step towards focusing on its successful core business in High-Tech Hose Systems made largely of polyurethane, said the company.
Masterflex added in its 29 June statement that several key investors have signed letters of intent saying that they are prepared to take equity stakes in Masterflex when the financing arrangement is implemented.