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Oerlikon clinches restructuring deal after 2009 loss

By
Reuters
Published
Apr 1, 2010

By Katie Reid

ZURICH, April 1 (Reuters) - Russian billionaire Viktor Vekselberg's debt-laden Oerlikon (OERL.S) has clinched a deal to restructure its balance sheet, solving a financial migraine that pushed the company to the edge of bankruptcy.


Oerlikon Headquarters Pfaeffikon, Switzerland - Photo: www.oerlikon.com

The loss-making technology group will boost its equity base by up to 1.3 billion Swiss francs ($1.22 billion) and slash net debt by around 77 percent under the plan, which was reached after months of talks between shareholders and lenders.

Vekselberg, who currently holds a 45 percent stake through his holding group Renova, is ready to inject 450 million francs in a capital hike, which will keep his stake at between just below 40 percent to 45 percent.

The plan also involves the group's lenders waiving between 25 and 125 million francs of debt and a debt-to-equity swap.

"Oerlikon, Renova and the lenders strongly believe that the financial restructuring comprehensively addresses the group's financing situation and establishes a sustainable capital structure in a single step," Oerlikon said in a statement.

The new loan facilities will mature in June 2014, Oerlikon said.

Time had been running out for the group, which had been due to repay the first tranche of the 2.5 billion syndicated loan it took on to refinance its buy of car parts and textile machinery maker Saurer nearly four years ago, at the end of March.

"We welcome the agreement between the lenders, Renova and Oerlikon and the fast execution of the measures in the second quarter as Oerlikon needs cash to increase its investment level again to a sustainable level," Helvea analyst Reto Amstalden said in a note.

DISMAL 2009


Oerlikon, which makes products including solar cells and coatings used in Formula One racing cars, posted a 2009 net loss of 592 million francs as one-time charges of 350 million francs weighed, and said 2010 would be a year of both operational and financial restructuring.

At 1125 GMT, shares in the group were trading 1.2 percent weaker, underperforming a 0.8 perrcent rise in the Swiss mid-cap index .SMIM, as investors digested the group's dismal annual results.

"Oerlikon reported both weaker-than-expected second-half 2009 results and outlook for its operations," Helvea's Amstalden said. "We believe Oerlikon started 2010 with a lower than expected improvement of the earnings power and quality."

The group, which is looking to cut another 1,700 jobs by the end of 2011 after slashing nearly 2,000 last year, is aiming to return to operating profitability in the second half of the year.

But Chief Executive Hans Ziegler told Reuters the group would still post a loss in 2010 when one-off charges and restructuring costs are included.

The over 100-year-old company has grappled with a sharp drop in demand in its key markets due to the most severe economic downturn in decades and recently said restructuring veteran Michael Buscher CEO would replace Ziegler as it tries to keep the operational side of its business on track.

Orders fell 28.8 percent to 3 billion francs in 2009, the most difficult year in its history, while sales tumbled 37.9 percent to 2.9 billion francs as its customers struggled to finance projects during the downturn.

"Oerlikon Group expects modest recovery of business volumes in 2010 which should pick up in 2011 and the years thereafter," the group said.

($1=1.066 Swiss Francs) (Editing by Mike Nesbit)

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