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Deutsche Nickel: A case study on German Restructuring By Matthew Prest, Director of Corporate Restructuring Group

Deutsche Nickel: A case study on German Restructuring By Matthew Prest, Director of Corporate Restructuring Group. 1.1 Introduction: background to VDN. Company overview Global leader across many markets Growth through series of acquisitions (particularly in 90’s) Main activities

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Deutsche Nickel: A case study on German Restructuring By Matthew Prest, Director of Corporate Restructuring Group

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  1. Deutsche Nickel: A case study on German RestructuringBy Matthew Prest, Director of Corporate Restructuring Group

  2. 1.1 Introduction: background to VDN • Company overview • Global leader across many markets • Growth through series of acquisitions (particularly in 90’s) • Main activities • non-ferrous metal technology (‘NFMT’) • payment systems • home decoration (Coswig) • fastening systems • 3,000 employees, Turnover c.€650m

  3. 1.2 Deutsche Nickel: overview • Company overview • NFMT and Payment Systems divisions • NFMT: nickel semis and alloys for industrial processing • Payment Systems: EuroCoin • European leader for coin blanks production • Turnover c.€250m • 1,300 employees • Key operations in Schwerte and Saxony

  4. 100% 100% 100% 100% 100% 100% 100% 100% 1.3 Capital structure overview Guarantee VDN AG €84.0m €130m (Intercompany) Liability €104 million,7.125% Notes due 2006 DeutscheNickel AG EuroCoin AG €25.0m €39.0m AuerhammerMetalwerke GmbH DeNiSysGmbH €11.0m < €1.0m Deutsche NickelPresstec GmbH ComcardGmbH < €1.0m <€1.0m Deutsche NickelAmerica Inc. €6.0m Saxonia Edelmetalle GmbH €8.0m 95% SaxoniaEurocoin €4.0m

  5. 1.4 Deutsche Nickel: background • Trading problems in 2004 • losses at Euro Coin • lower demand, price war, margins hit • Notes traded – 4 key funds • July ’04 : Company proposal to Noteholders • August ’04 : Close appointed financial adviser • Sept ’04 : Company proposal rejected • principle of debt: equity swap raised by notes • Haarmann Hemmelrath appointed noteholder representative

  6. 1.5 Deutsche Nickel: key issues • Bank’s security over operating companies • potential breach of negative pledge • Complex capital structure • Trade union agreement for asset transfer • Diverse ownership of notes • difficult to identify • exchange offer failure • German legal issues

  7. 1.6 Deutsche Nickel: solutions • Debt for equity swap (equity provided pro-rata to claim) • Bank debt purchased by Ad Hoc Committee • New CEO – operational plan agreed • UK CVA debt restructuring planned

  8. 1.7 Deutsche Nickel: debt restructuring • Deal with VDN: cash and guarantee waiver • UK parentco established • Assets transferred to German LLP • LLP transferred assets to UK company • UK administration with CVA (only 75% consent required) • June ’05 : CVA appointed by creditors

  9. 1.8 Deutsche Nickel: debt restructuring Pre restructuring Post restructuring DNICK Ltd. (Newco) CVA Creditors DNICK Holding plc EU Coin Ltd DNICK Holding plc Deutsche Nickel GmbH EU Coin Interco Ltd Deutsche Nickel GmbH EU Coin Interco Ltd Subsidiaries Eurocoin GmbH Subsidiaries Eurocoin GmbH Subsidiaries Subsidiaries

  10. 1.9 Deutsche Nickel: other issues • Pensions : state guarantee crystallised • Tax : real estate transfer tax

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