Company Statement No. 90 of 14th May 2009
Period Statement for Tower Group A/S for the period 1st January - 14the May 2009
Tower Group hereby announces its period statement covering the period 1st
January to 14th May 2009.
The period statement is published in accordance with § 27, section 8 of the
Danish Securities Trading Act and it expresses the wish of the company to lead
an open and informative IR policy.
Events in the period 1st January to 14th May 2009:
• As part of a future consolidation phase Tower Group A/S has strengthened the
management of the board of directors and of the board.
• Mr. Michael Brag was appointed new CEO as per 1st January 2009. The former
CEO of the company, Procida, was appointed new COO in charge of the daily
management of the company, and the former COO, Henrik Norup, withdrew from the
board of directors of his own choice.
• At an extraordinary general meeting on 30th January 2009, Niels B. Thuesen
and Svend J. Heineke were elected members of the board. The two new members
replace Mads Richardt and Steen Hvidt, who both wanted to withdraw from the
board. The board elected its officers as follows: Chairman: Jens Erik
Christensen and vice chair: Jesper Bo Hansen.
• As from 1st February 2009, the administration contract with Tower Management
A/S terminated and as a consequence of this, the employees in Denmark and in
Germany were transferred to Tower Group. At the same time, certain cost cuts
and changes were made for a new organisation at Tower Group and a series of
cost savings were implemented. Furthermore, focus was taken off purchase and
concentrated on operational improvement.
• Taking effect as from 1st February 2009 the company has denounced its
administration contract with the German company Curanis Wohnimmobilien GmbH due
to important violation of the contract relating to the administration of the
properties in NRW belonging to Tower Group, which represents more than 50% of
the total activities of the company. An interim claim has been set at 3.5
million EUR, which will be presented through the courts.
• Because of the break-up with Curanis, Tower Group has established a new
set-up in NRW, where the portfolio is managed by a network of 3 superintendents
besides an independent management in Wuppertal. The portfolio is centrally
recorded at a German office, but using Tower Group's own system of accounts in
a new set-up assuring the ownership of data and real-time updating. Having
studied the process of NRW, Tower Group has decided to insource the management
of 2853 of the group's leases in Wuppertal and its surroundings through the
company's office in Wuppertal. Furthermore, a personal leasing concept was
established in Wuppertal (www.wuppertal-wohnen.de) that together with a
specific division for arrears, increases the leasing level and ensures a close
follow-up on the arrears on rent of the NRW portfolio. Furthermore, as per the
month of April the new-established accounting system will offer better
possibilities of following the result at selected external administrators in
NRW and give an improved asset management in relation to external
administrators. With a continuous focus on the optimising of the operation,
other possibilities of insourcing are being considered, such as the possibility
of transferring parts of the Berlin administration to in-house management.
• The operational losses that were demonstrated in the second half of 2008 and
announced in the company statement of 23rd December 2008, meant a rather
overstretched cash position of the company. Compared to the need for
refinancing, the company has, so far in 2009, negotiated with a number of
Danish bankers. An agreement has been reached as to the main conditions of an
agreement with a number of Danish bankers. The purpose of the agreement is to
ease the short-term cash challenges relating to the administration of
properties, while the management of the company is still working on a
strengthening of the total capital structure of the company and giving Tower
Group the option of adapting and rationalizing the operation in order to
strengthen the continuous operation and profitability of the group.
The overall strategy of Tower Group is to invest in German properties that are
well situated and that represent an attractive investment potential. The goal
is to create a healthy and stable business with a potential of important value
increment to the shareholders. The investment has a long-term horizon and the
properties of the company must, at portfolio level, generate a positive cash
flow.
Given the restrictions as to the access to financing and based on the fact that
the administration of the company's property portfolio shall be made more
efficient in order to ensure a positive cash flow, the company has stopped the
purchase of new properties, and focus is entirely on the administration of
properties and further value creation through active asset management.
We do not expect the above events to influence on the expectations as to the
net result of the financial year 2008/09, which prior to valuation adjustments
and tax is expected to represent -110 million DKK to -120 million DKK.
Kind regards
Tower Group A/S
Michael Brag
CEO
For any questions relating to the present statement, please call Michal Brag,
CEO, on 39 45 26 00 or 25 10 12 00.
