Nordex gets back on its feet -- Recapitalisation plan

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In the wake of a major restructuring program, German wind turbine manufacturer Nordex is close to securing its "urgently needed" recapitalisation. Banks already financing Nordex and a group of investors led by private equity company Capital Management Partners (CMP), and including investment bank Goldman Sachs, have signed agreements to participate in the recapitalisation plan which will be implemented following a vote at a shareholders meeting later this month. "This will put us back on a normal footing," says Nordex' spokesman Ralf Peters. "We'll have a creditworthiness such that customers are happy to do deals with us again."

He admits several contracts have been lost because banks have been unwilling to carry the extra risk associated with a "financially-wobbly" turbine supplier. "The current weak balance sheet structure and limited liquidity for the interim financing of projects constituted an obstacle to a larger business volume," says the company.

addressing problems

Assuming shareholders rubberstamp the plan, the investor group will hold a majority stake in Nordex. This will be at least 52% and will be held for up to five years, while the company builds in strength and value. Under the terms of the deal and Germany's "restructuring privilege" regulations, the new investors are exempt from having to make a takeover bid for the company, enabling the new investors to acquire the majority share without buying out the rest of the shareholders. This means the new money will go into the company to address problems rather than into the pockets of the existing shareholders.

The plan involves a number of steps. First, the existing 52 million Nordex shares will be reduced at a ratio of 10:1 to reflect the value of the company at the turn of the year

Nordex equity stood at about EUR 5 million, or around one-tenth of the nominal value of the 52 million EUR 1 stakes. The new investors will then subscribe to up to 30 million new shares in a planned cash capital increase of at least 30 million, and up to 41.64 million new shares at a subscription price of EUR 1. They also have the option to take up another 10 million shares offered by Nordex.

Then one of two things will happen. The banks financing Nordex will partially waive debt to the tune of EUR 27.8 million in return for up to 12 million new shares, or participate in a solution with "comparable economic effect," they say.

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