As a result of a free-float of around 35% of the issued convertible bonds which was unknown to the company, OTI Greentech AG (German Securities Code (WKN) A0HNE8) is not able, as originally planned, to adjust the bond conditions with all of the holders of convertible bonds outside a creditors’ meeting. Only six parties originally subscribed to all the bonds, and the Managing Board believed that it would be possible to contractually agree an adjustment to the bond conditions with these parties, which would have been quicker and more cost efficient. It has now become apparent that one of the parties transferred the majority of the bonds it had subscribed for to third parties, which means that it has to be assumed that there are now more than 40 parties. As a result, OTI Greentech AG will soon call a creditors’ meeting for both of its convertible bonds. As part of the restructuring of financial liabilities, the creditors’ meetings will be asked to resolve to reduce the respective interest rates, to defer the last interest payments, and to extend the term of the convertible bonds. The interest rate for both convertible bonds shall be retroactively reduced from the date of the last interest payment (30 October 2017 and 23 November 2017) from 8.5% to 4.0%. The interest payments due on 30 April 2018 and 23 May 2018 were suspended by the Managing Board. The company has written acceptance for the restructuring for the convertible bonds from all of the holders of the bonds which are not part of the abovementioned free float.
As a result, OTI Greentech AG will have to postpone its Ordinary General Meeting for fiscal year 2017, originally planned for 17 July 2018. Invitations to the Ordinary General Meeting will be issued after the creditors’ meetings. Some of the holders of the convertible bonds have already signalled that they will convert part of the bonds they hold into shares of OTI Greentech AG, which would further reduce the group’s financing costs and total debt, and strengthen its equity. However, this depends on the announced capital reduction being approved at the coming general meeting and also the adjustment to the conversion price of the bonds.
The convertible bonds have to be restructured in order to receive an auditor’s opinion that the group is a going concern, and, in addition to the capital reduction, it is also a key step to further clean up the balance sheet of OTI Greentech AG.
Provisional results for fiscal 2017
According to the reviewed consolidated financial statements, which have not yet been issued with an auditor’s opinion, the group’s revenues totaled TEUR 7,494 in 2017 (down 15% compared to fiscal year 2016). EBITDA totaled TEUR -11,294 (previous year: TEUR -2,673, however EBITRA in 2017 was impacted by the one-off effect included in other operating expenses from the deconsolidation of the Visionaire Energy Group in the amount of TEUR 9,337. The expenses are due, in particular, to the loss of goodwill (TEUR 15,405) on the respective deconsolidation date. These losses are partially offset by the negative equity of the deconsolidated companies, the purchase price and currency translation effects. The reduction in consolidated liabilities and the deconsolidation of additional external (net) liabilities of the sold companies as a result of the transaction has resulted in a significant improvement to the balance sheet structure. Without the extraordinary effects from this transaction, operating EBITDA is TEUR -1,958, and thus an improvement compared to the previous year’s figure of TEUR -2,673.
As of 31 December 2017, assuming a going concern (which depends to a material extent on approval for restructuring the convertible bonds), the group’s total assets amounted to TEUR 9,089 (2016: TEUR 23,826). This reduction is due, in particular, to the deconsolidation of the subsidiaries and the resulting loss of assets and liabilities. Equity amounts to TEUR 1,991 (2016: TEUR 9,607). The equity ratio is 21.9% (2016: 40.3%)
The remaining operating units of Uniservice Unisafe, OTI Greentech Innovative Solutions and the joint venture with KMI Cleaning Solutions are continuing to develop positively and measures are being put in place to reduce the group holding company’s operating costs as far as possible, in order to be able to record a positive consolidated EBITDA as quickly as possible.
Update Rada insolvency
Following on from the bankruptcy of Rada at the start of October 2017, the Managing and Supervisory Boards immediately launched investigations in order to identify the reasons for this unexpected event. These investigations have now resulted in court proceedings being launched in May 2018 against the managing director of the operating company, Rada Engineering & Consulting Bergen AS, in which the OTI Greentech Group held a 51% equity interest. The managing director is accused of not having fully and correctly informed the Board of Directors of Rada of the company’s financial condition, which meant that the requisite actions to avoid insolvency could no longer be initiated in good time. This legal action is being taken by Visionaire Energy AS (the former OTI Greentech group company which held the equity interest in Rada Engineering & Consulting Bergen AS) as the plaintiff. According to the purchase agreement with Visionaire Invest with regard to the sale of the Visionaire Energy Group, OTI Greentech AG is due 20% of any proceeds (after the deduction of costs) from any successful legal action. OTI Greentech AG also has a right to receive information. OTI Greentech AG’s Managing Board is following the course of the proceedings.