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© Elcoteq Electronics Production | July 18, 2011

Elcoteq to apply for controlled management under the laws of Luxembourg

Elcoteq SE has decided to apply for controlled management under the laws of Luxembourg to secure continuation of the Company's current operations and to allow the previously announced outside investor to finalize its due diligence.

This is a consequence of Elcoteq's revolving credit facility lenders' decision to accelerate Elcoteq's outstanding revolving credit facility despite requests for a standstill. Elcoteq has received a notice from Danske Bank, according to which Danske Bank has decided, under the direction of the revolving credit facility lenders, to accelerate Elcoteq's outstanding revolving credit facility despite the ongoing negotiations concerning the contemplated transaction with the outside investor. Simultaneously, the lenders have taken actions to block some of the Company's bank accounts. Danske Bank is acting as an agent on behalf of the other lenders: The Royal Bank of Scotland, Skandinaviska Enskilda Banken, Nordea Bank, Pohjola Bank, Banco Bilbao Vizcaya Argentaria, UniCredit Bank and HSH Nordbank. Since November 2009, the Company has been able to reduce the revolving credit facility from 230 million euros to 48.5 million euros. On June 30, 2011, the Company announced that the Company would not be able to repay on its maturity the remaining outstanding amounts under the facility. However, the Company entered into negotiations with the outside investor concerning a major equity and debt investment in the Company, and if the intended transaction is consummated, it would significantly strengthen Elcoteq's financial position. "The Company is extremely disappointed that the lenders have taken the above actions despite requests not to accelerate the facility in order to secure enough time for the outside investor to complete a confirmatory due diligence process. In the Company's view, the lenders' act shows total disregard of the Company's customers, suppliers and close to 7000 employees as well as other stakeholders", a statement says. Due to the developments described above, the Board of Directors of the Company has decided to apply for controlled management under the laws of Luxembourg to secure continuation of the Company's current operations and to allow the outside investor to finalize its due diligence.
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