Deutsche Distressed-Assets- Konferenz. Rescue from distressed situation. 16 April 2015

Transcription

1 Deutsche Distressed-Assets- Konferenz Rescue from distressed situation 16 April

2 DISCLAIMER This presentation has been prepared by 3W Power S.A./ AEG Power Solutions for information purposes only. This presentation contains forward-looking statements. The words believe, expect, anticipate, intend and plan and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding 3W Power's and/or AEG Power Solutions financial position, business strategy, plans and objectives, are forward-looking statements. Such forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by forward-looking statements. We caution you, therefore, that you should not rely on any of these forwardlooking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forwardlooking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions. The forward-looking statements in this document speak only as at the date of this presentation and 3W Power assumes no obligation to update such forward-looking statements. Certain information contained in this presentation is still in draft form and the contents of this presentation have not been legally verified. In particular, it should be noted that the financial information contained herein has not been audited. No representation or warranty, express or implied, is given by or on behalf of 3W Power, AEG Power Solutions or any of such persons' directors, officers or employees or any other person as to the accuracy or completeness of the information or the opinions contained in this document and no liability is accepted for any such information or opinions. Unless otherwise stated in this document, the information contained herein is based on 3W Power information and estimates. The information and opinions contained in this presentation are provided as at the date of this document and are subject to change without notice. This presentation does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities to any person in any jurisdiction. This document is not intended for distribution to, or use in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. 2

3 CONTENTS I. Company 4 II. Restructuring 8 III. Key Performance Indicators

4 I. Company

5 OUR COMPETITIVE STRENGTHS AEG PS Group provides high quality electrical power supply for mission critical applications Best in class customer specific systems and solutions High quality assembly, installation, commissioning, and field service R&D excellence and proven ability to bring new technologies and applications to market Large installed base and potential for growing services Strong brand recognition Certified supplier by major customers Know-how of energy storage technology 5

6 KEY BUSINESS ACTIVITIES Systems & Solutions Markets Energy Efficiency Solutions (EES) Uninterruptible Power Supply (UPS) Chargers & DC Systems Rectifiers Services Industry & Infrastructure Oil & Gas Transportation Power Generation General Industries Commercial Data / IT Facilities Renewable Energy Solutions (RES) Power Controls Energy Storage Solar Inverters Micro Grid Solutions Industrial processes requiring precise heat or power over time Distributed Power Generation Network Management Solar and other renewables Applications following mega trends (ballast water treatment, energy storage, grid stabilisation) 6

7 Corporate History 1887 & Foundation of AEG (Ger.) Foundation of AEG SVS Power Supply Systems Foundation of Saft (Battery, Fr) Foundation of SAFT Power Systems Acquisition of Harmer & Simmons Acquisition of AEG SVS Power Supply Systems by SAFT Power Systems Merger of SAFT Power Systems with Alcatel Converters Acquisition of SAFT Power Systems by Ripplewood from Alcatel Rebranding SAFT Power Systems to AEG Power Solutions Listed as 3W Power operating as AEG Power Solutions Comprehensive operational and financial restructuring Heritage Time with Alcatel Independent & AEG 3W Power / AEG Power Solutions Public 7

8 II. Restructuring

9 ANALYSIS OF THE CRISIS Business Downturn ( ) Complex Management Structure Inappropriate Capital Structure Customer and Supplier Uncertainty Deterioration of business since end of 2011 principally in Solar and POC Failure to adjust fixed costs to diminished business opportunities No previous operational improvements Increase in number of loss making activities Multidimensional management organisation Diffusing responsibilities and increasing costs Low attention to comprehensive business redesign Lack of adequate investments in IT architecture Capital structure not suitable for Company s assets, performance, profitability, or outlook Gross debt at ca. 125 million Annual bond coupon of 9.3 million puts large strain on liquidity General market uncertainty about the solvency of AEG PS Orders not awarded or cancelled because of financial distress Worsening payment conditions by suppliers Inability to obtain credit insurance and performance bonds to fund core operations 9

10 IMPLICATIONS FOR THE RESTRUCTURING A comprehensive restructuring approach must address all dimensions of the Company Financial Operations (medium term) Overhead Restructure the bond ( 100 million) Re-establish bankability (e.g., performance bonds) Restore trust by credit insurers and business partners Focus on cash generation Redesign business processes with focus on efficiency Focus business resources on core business (UPS) Close / divest non-core or loss-making activities Right-size operational headcount Prioritise and focus R&D activities Shift selected headquarter functions to operational units Establish clear, lean and empowered management structure Reduce headcount Upgrade business processes in sales, marketing, IT, HR, finance etc. 10

11 ILLUSTRATIVE GIVES AND GETS ANALYSIS The stakeholders had to contribute to the turnaround to make it a success Stakeholder Gives Gets Company Management Shareholders Bondholders Suppliers Customers Employees Rightsizing Focus on core business Process improvements Restructuring efforts Hard work Dilution Provision of fresh money Reduction of nominal face value Interest rate reduction Extension of maturity Relaxation of restrictive payment terms Loyalty Orders Redundancies / social agreements Commitment to change Mid-term recovery Re-acceptance in the market place Liquidity to conduct the business Path to growth and success Incentive scheme aligning to Company goals Possibility of share price appreciation Opportunity to invest Additional security Equity participation Attractive recovery potential Future business relationship Strong partner Top class products Stable business relationship Improved job security 11

12 SELECTED ELEMENTS OF THE RESTRUCTURING PROGRAM Governance Structural Operational New ownership structure New committed board with relevant experience Appointment of CRO with control over allocation of resources Establishment of restructuring committee Removal of costs and establishment of clear responsibilities of management Sale of non-strategic assets Closing of unprofitable / cash-consuming operations Allocation of resources to core UPS business Drastic overhead cost reductions Agreement on and partial implementation of workforce reductions Reinforcement of global sales activities in industrial markets 12

13 CRITICAL STEPS OF THE FINANCIAL RESTRUCTURING PROGRAM May 5 th, 2014: Decisive Bondholders Meeting Bondholders approved the restructuring concept June 25 th, 2014: Extraordinary General Meeting of Shareholders Shareholders approved the restructuring concept July August 2014: Implementation of Capital Measures Reverse share split EGM 25 June 2014 Capital reduction Debt / equity swap Cash capital increase Listing of new shares and the new bond Completion 29 August 2014 August 2014: Placement of Remaining Securities Rump placement of remaining securities (bonds and equities) via book-building process Close Brothers Seydler Bank AG (meanwhile ODDO SEYDLER BANK AG) was Global Coordinator and Securities Exchange Agent 13

14 KEY TERMS OF CAPITAL INCREASE WITH SUBSCRIPTION RIGHTS About 25 million new shares were offered to the Company's shareholders by way of indirect subscription rights # Criteria Key Terms Quantity & Method Entitled Persons Subscription Ratio Subscription Price Subscription Period Subscription Rights Trading 7. Underwriter Increase of share capital from 50, to 301, Issue of 25,109,731 new registered shares with a nominal value of 0.01 by way of indirect subscription rights The new shares will be offered to the Company's shareholders 1:5, i.e. shareholders may subscribe five new shares for every existing share at the subscription price 0.16 per share Start on 24 July 2014; end on 25 August 2014 (inclusive) No organized trading in subscription rights Any new shares not subscribed for by existing shareholders plus 1,164,551 new shares were used for a private placement ( rump placement ) Close Brothers Seydler Bank AG (meanwhile ODDO SEYDLER BANK AG), Frankfurt am Main, Germany 14

15 SUMMARY OF THE EXCHANGE OFFER Each existing bond gave the right to subscribe for a new bond plus 452 new shares in the Company 1 Bond ( 1,000 nominal) New Bond Issuance New Shares 1 1 Bond 2 ( 500 nominal) 452 new shares in the Company Old Bond of 100 million exchanged into 50 million New Bond and 45.2 million new shares 15

16 KEY TERMS OF THE NEW BOND 1 Bondholders received better security in exchange for market-adjusted interest rates and extended repayment terms # Criteria Key Terms 1. Issuer 3W Power SA, Luxembourg 2. Guarantor Guarantees from subsidiaries of the Issuer constituting 85% of the Group s total external revenue 3. Nominal 50 million 4. Maturity Five years after issuance 5. Interest 6. Security Interest rate of 4% in year 1 Interest rate increases by 2 percentage points each year (rate of 12% in year 5) Semi-annual payment Share pledge of subsidiaries of the Issuer constituting 85% of the Group s total external revenue Current accounts of Issuer and claims from intercompany loans by parent companies to pledged subsidiaries Early redemption at the option of the Issuer at the Call Early Redemption Amount of 101 percent of the outstanding principal amount 7. Other Team Treuhand GmbH functioned as Common Bondholder Representative 16

17 CAPITAL MEASURES STEP-BY-STEP 2 Preparatory Measures Cash Capital Increase Debt / Equity Swap Management Incentive Program Redemption of 4 shares (technicality) Consolidation of shares (10:1) Reduction of nominal share capital to 50k (from 12.5m) Old shareholders 100% Shareholders received opportunity to acquire 25.1m shares Fresh money of 4m (rounded) into the Company Old shareholders 100% Bondholders received 45.2m shares in exchange for 50% of the old bond and accrued interest until conversion 60% dilution of existing shareholders Old shareholders 40% Alignment of interest of management and bondholders Issuance of up to 8.4m new shares MIP vests upon achievement of certain market capitalisation levels Trustee / Management <10% 100% = 5 million shares 100% = 30 million shares Old Bondholders 60% 100% = 75 million shares Old bondholders 54% 100% = 84 million shares Old shareholders 36% EGM 25 June 2014 Completed end of August 2014 Completed end of August 2014 Completed end of August

18 RESULTS OF FINANCIAL RESTRUCTURING MEASURES Rights Offering to Shareholders Capital increase of 4m successfully accomplished Offering was fully underwritten, all 25,109,731 new shares issued could be placed Subscription rate amounted to approx. 78% Rights not exercised by existing shareholders were sold as private placements to those conducting the underwrite Price of the rights offer was 0.16 per share Rights offer shares were included in the existing shares listing on 29 August 2014 Exchange Offer to Bondholders Creditors of the old bond exercised their acquisition rights to the new shares amounting to approx. 82% and to the new notes amounting to approx. 84% New shares and new notes for which no acquisition rights were exercised or creditors of the old bond chose cash compensation have been offered in an accelerated bookbuilding on 25/26 August 2014; placement price for these shares was set at 0.26 and for these notes was set at 70%, i.e. 350 Inclusion of new notes to trading effective since 27 August 2014 by way of trading on terms of issue; rights offer shares were included in the existing shares listing on 29 August 2014 After successful closing of the financial restructuring, the Company is focused exclusively on the continued operational improvement initiatives 18

19 RESULTS OF FINANCIAL RESTRUCTURING MEASURES Successful conversion of the bond resulted in: Reduction in loans from 100m to 50m in exchange for new shares (debt to equity) Reduced interest expense from 9.25% p.a. (flat) to an initial rate of 4.00% p.a. with annual step up of 2% per year to a maximum of 12.00% p.a. Extended maturity to 29 August 2019 New bond is freely pre-payable at any time Cash capital increase from authorized capital and successful placement of 25,109,731 new shares at a price of 0.16 means cash inflow of about 4 million The conversion of the bond and the capital increase resulted in a substantial improvement of the Company s equity which represented 22.5% of the total balance sheet as at 31 December

20 III. Key Performance Indicators 2014

21 AEG PS GROUP KEY PERFORMANCE INDICATORS 2014 Quarter to December Twelve months to December EURm Q Q % change % change Order backlog % % Orders % % Revenue % % Book to Bill % % EBITDA (5.6) (13.4) 57.8% (12.2) (23.6) 48.2% % of revenue -9.8% -21.5% -6.0% -9.1% Normalized EBITDA* % (17.7) (5.3) % of revenue 3.1% 2.9% -8.7% -2.0% * Normalized EBITDA is EBITDA impacted by one-time transactions Most important driver for the Company s profit situation in 2014 was the complex restructuring The effects of the operational restructuring measures are improving the results and provide evidence that the Company is stabilizing The positive 1.8 million Normalized EBITDA in Q demonstrates the Company s ability to achieve profits in operating business and underlines the progress achieved in the turnaround process %-changes are not shown if considered not to be helpful in the understanding of the KPIs. Rounding differences may occur. Historical numbers have been represented for comparative purposes. 21

22 RES Key Performance Indicators Quarter to December Twelve months to December EURm Q Q % change % change Backlog % % Orders % % Revenue % % Book to bill % % EBITDA (10.5) (8.9) -17.6% (7.8) (6.8) -15.4% % of revenue % -86.0% -25.6% -7.0% Normalized EBITDA (0.6) (1.1) 45.8% (18.7) 1.2 na % of revenue -7.9% -10.8% -61.4% 1.2% %-changes are not shown if considered not to be helpful in the understanding of the KPIs. Rounding differences may occur. Historical numbers have been represented for comparative purposes. 22

23 EES Key Performance Indicators Quarter to December Twelve months to December EURm Q Q % change % change Backlog % % Orders % % Revenue % % Book to bill % % EBITDA % % of revenue 7.8% 5.5% 2.0% 0.3% Normalized EBITDA % % % of revenue 4.9% 13.0% 2.1% 3.5% %-changes are not shown if considered not to be helpful in the understanding of the KPIs. Rounding differences may occur. Historical numbers have been represented for comparative purposes. 23

24 AEG PS GROUP Balance Sheet ASSETS, [EURm] December 31, 2014 December 31, 2013 OWNER S EQUITY / LIABILITIES, [EURm] December 31, 2014 December 31, 2013 Property, plant and equipment Intangible assets Goodwill Other non-current financial assets Deferred tax assets Total non-current assets Inventories Trade and other receivables Prepayments Cash and cash equivalents Total current assets Total assets Share capital Share premium Retained earnings (354.5) (359.3) Reserve for own shares (22.9) (22.9) Cumulative translation adjustment Total equity attrib. to equity holders Loans and borrowings Employee benefits Deferred tax liabilities Provisions Total non-current liabilities Loans and borrowings Trade and other payables Income tax liabilities Deferred income Provisions Total current liabilities Total equity and liabilities Rounding differences may occur. 24

25 CONTACT INFORMATION Hillermann Consulting Investor Relations for 3W Power/AEG Power Solutions T: +49 (0) E: 25