Escada AG, the German maker of luxury clothing for women, asked corporate bondholders to accept conditions that cut the nominal value of their investment by about 60 percent, as the company seeks to avoid insolvency, Bloomberg reported. Investors were asked to exchange €200 million ($281 million) in seven-year bonds due 2012, the company said in a statement today. Each €1,000 in old debt will be replaced by one bond worth €250 maturing in 2014 and a second bond worth €125 due 2016, the company said. A €25 cash bonus for signing up early raises the nominal value of the new offer to €400 per €1,000 held. Interest paid on the new bonds is higher, Escada said. “It’s a choice between the plague and cholera,” said Klaus Kraenzle, an analyst at GSC Research GmbH in Dusseldorf. “I think investors have no choice but to accept,” or face the risk of insolvency, said Kraenzle, who doesn’t rate the stock. Read more.
Daily Insolvency News Headlines
Tue., June 30, 2009
A bankruptcy judge has approved bidding procedures for telecommunications company Nortel Networks Corp. to sell its wireless infrastructure business, with Nokia Siemens Networks BV making the $650 million stalking horse bid, Bankruptcy Law360 reported. Read more. (Subscription required.)
Mon., June 29, 2009
The Addington Palace Hotel is in fixed charge receivership after concerns it could not pay its creditors. The famous hotel is owned by Addington Palace Limited, part of the Westmead Group. Its mortgagee, the Hanley Economic Building Society, appointed Bob Young as a Fixed Charge receiver after it was worried about the repayment of its loan. The building society had already submitted a petition to wind up against Addington Palace Limited on March 26, meaning it believed the company was unable to pay its debts. Bob Young, a partner in firm Begbies Traynor who specialise in corporate rescue, restructuring and recovery and personal insolvency, said his appointment was a “purely protective” measure. He added: “We have made it clear to the director we have no wish to stop the business trading. Read more.
Australian start-up Strategic Airlines has bought Australian charter carrier OzJet, which went into voluntary administration in May, Flightglobal reported. Strategic CEO, David Blake, said Strategic bought OzJet from the administrators because "it has one or two interesting routes in Western Australia [such as] Perth-Derby, which is a regular passenger transport route, that is doing quite well and is a protected route under the name OzJet." The other reason it bought OzJet was because of its air operators certificate, confirms Blake, adding that it plans to operate Airbus A320s under the OzJet AOC starting around September. Blake is OzJet's former chief operating officer. He says just before it went into voluntary administration in May, OzJet downsized to about 50 employees. Strategic plans to retain 20-25 OzJet employees including most of the cabin staff, he adds. OzJet was operating four Boeing 737-200s but these are excluded from the airline purchase, confirms Blake. Read more.
Spain's government approved a long-awaited €9 billion ($12.66 billion) bailout fund to shore up banks weakened by a deep economic recession and get them lending again, The Wall Street Journal reported. Spanish Finance Minister Elena Salgado said the country's systemically important institutions are healthy, but some smaller banks could have "problems" as the downturn deepens. The Spanish government first started talks with opposition parties in March on a mechanism to inject public funds into troubled banks; progress in Spain has been slow, however, partly because the banks have weathered the global financial crisis relatively well after their regulator forced them to build up large cushions against losses and discouraged them from investing in toxic U.S. subprime assets. Ms. Salgado said the bailout fund can be expanded to €27 billion this year, or about 2.5% of gross domestic product, and then to as much as €99 billion in the coming years. The banking sector, through its deposit insurance fund, will contribute 25% of the initial €9 billion of the bailout fund, while the unused funds from a government liquidity program for banks will make up the remainder. Additional resources for the fund would come from government-backed debt or government credits. Read more. (Subscription required.)
Porsche has rejected Volkswagen AG's bid to take a 49 percent stake in the sports car maker, a company spokesman said Monday. Porsche Automobil Holding SE spokesman Albrecht Bamler said the offer by VW "is not a viable option," the Los Angeles Times reported on an AP story. Debt-laden Porsche, based in Stuttgart, has been holding talks with a Qatar state investment fund on a possible investment. Porsche confirmed earlier this month that it is in exclusive talks with the Qatar Investment Authority — the primary investment vehicle of the small, energy-rich state. Bamler said that for VW to take a stake in Porsche, the Wolfsburg-based automaker would have to take out credit worth €10.75 billion ($15.15 billion). Porsche holds a roughly 51 percent stake in Volkswagen, but ran up hefty debts in accumulating that holding and is now seeking a merger with the larger company. Exactly how that is to happen remains unclear. Read more.