With Company release no. 26, 30 June 30 2011, the Company informed that some German subsidiaries of the Company are in a situation where they are unable to make some installment payments on some of their loans.
The management of the relevant subsidiaries is, as a matter of German law, required to file for insolvency without undue delay – that is, at the latest 3 weeks of the date of insolvency (unable to pay payments that are due) under the prerequisite that there are indications from the banks that an agreement on the restructuring can be reached.
Regarding the subsidiaries Tower 1 Immobilien Dritte GmbH and Tower 1 Immobilien Fünfte GmbH, the management, today, came to the conclusion that the negotiations with Landesbank Hessen Thüringen (HeLaBa) will not lead to an agreement on the restructuring. As a result, the management of these two subsidiaries is filing for insolvency as of today, 21 July 2011. The two subsidiaries are representing 27% of the portfolio.
The court will shortly announce a preliminary insolvency administrator who will take over all management functions in the subsidiaries. From today’s perspective the Company assumes that this insolvency administrator will continue the property management business in these two subsidiaries based on our management contracts with Tower Management GmbH. In a long-term perspective, the administrator will have to decide, together with the lender, how to organize the management of the insolvent subsidiaries. The Company expects, however, that the administrator will also negotiate with the lender and the shareholder regarding a restructuring of the Company in order to remove the subsidiaries from the actual insolvency situation.
The other German subsidiaries, where the Company has announced the same insolvency situation, are still in a negotiation situation with positive indications from the other financing banks that an agreement on the restructuring can be reached in time. The Management has been able to agree on new short-term standstill agreements with the banks so that the insolvency situation, announced in Company release no. 26, for the other subsidiaries is not due at the moment. Based on the standstill agreements, the management will continue the negotiations with the senior banks in order to reach an agreement on the long-term restructuring of the Company.
At present, due to the complications, the management is not in a position to elaborate further on the impact of this new situation to the expectations of the year-end results of the Company.
Kind regards
Tower Group A/S
Martin Coté
CEO
Questions regarding this release can be directed to Martin Coté, CEO, on tel.: +420 725 716 755.
