9 May 2014, Frankfurt/Main EUROPEAN RESTRUCTURING DAY...

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EUROPEAN RESTRUCTURING DAY 2014 9 May 2014, Frankfurt/Main Refinancing and Restructuring Trends for 2014/2015

Transcript of 9 May 2014, Frankfurt/Main EUROPEAN RESTRUCTURING DAY...

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EUROPEAN RESTRUCTURINGDAY 2014

9 May 2014, Frankfurt/Main

Refinancing and Restructuring Trends for

2014/2015

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Programme (I)

9.00 am Registration and Welcome Coffee

9.30 am Opening Remarks

Dr. Thomas Hoffmann, Co-Head Restructuring and Insolvency, Noerr LLP

9.45 am Keynote – Insolvency Legislation in a European Context: Group Insolvencies et al.

Prof. Dr. Heribert Hirte, Member of the German Bundestag, Member of the Committee on

Legal Affairs and Consumer Protection & Member of the Committee on the Affairs of the

European Union, German Bundestag

10.15 am Releasing the Brakes – The A.T.U Case

Christian Sailer, CFO, A.T.U Auto-Teile-Unger Handels GmbH & Co. KG

Detlef Specovius, CRO, A.T.U Auto-Teile-Unger Handels GmbH & Co. KG

10.45 am Getting Back on Track – The Nürburgring Experience

Dr. Alexander Jüchser, Partner, Lieser Rechtsanwälte

Alexander Bischoff, Partner Corporate Finance – M&A, KPMG

11.15 am Smartphone Break

11.30 am The Shipping Crisis – Proposals for a Solution

Wolfgang Topp, Head of the Restructuring Unit, HSH Nordbank AG

12.00 am Sewing Company Arrangements – The Miss Sixty Case, Italy

Paolo Bodo, CEO, Sixty Far East Ltd. (Miss Sixty)

Giovanni Nardulli, Legance Avvocati Associati

12.30 pm Lunch & Networking

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Programme (II)

1.30 pm Critical Success Factors within the Restructuring Process – (New) Rules of Corporate

Restructuring

Hans Joachim Weidtmann, Managing Director, Head of Group Intensive Care Corporates,

Commerzbank AG

2.00 pm New Players, New Rules?

The Role of Distressed Investors in European Restructurings and Insolvencies

Prof. Dr. Reinhard Bork, Managing Director of the Seminar for Civil- and General Procedural

Law, University of Hamburg

Mia Drennan, Principal, Global Loan Agency Services Ltd.

Oliver Kehren, Managing Director, Morgan Stanley

Hans Joachim Weidtmann, Managing Director, Head of Group Intensive Care Corporates,

Commerzbank AG

Hosted by Dr. Thomas Schulz, LL.M., Partner, Noerr LLP, London

2.45 pm Smartphone Break

3.00 pm Distressing Bonds – The Global PVQ (formerly known as QCells)-Case

Martin Schoebe, LL.M., Partner, Insolvency Administrator and Sequestrator, hww wienberg

wilhelm Insolvenzverwalter Partnerschaft

3.30 pm Building New Financing – The Asamer Case, Austria

Jörn Trierweiler, CRO, Asamer Holding AG

Dr. Peter E.J. Winkler, LL.M. (Harvard), Partner, Eisenberger & Herzog, Wien

4.00 pm Closing Remarks

4.15 pm Stay Together with Finger Food

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RELEASING THE BRAKES

Christian Sailer, CFO, A.T.U Auto-Teile-Unger Handels

GmbH & Co. KG

Detlef Specovius, CRO, A.T.U Auto-Teile-Unger Handels

GmbH & Co. KG

9 May 2014, Frankfurt/Main

The A.T.U Case

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Releasing the brakesThe A.T.U case

09 May 2014

Christian Sailer /// CFO, A.T.UDr Christoph v. Wilcken /// Schultze & Braun GmbH

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2014 Restructuring

9 May 2014 /// 06

Agenda

1. A.T.U - Overview of the company

2. Restructuring liabilities and shareholders' equity: background

3. Financial restructuring plan

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2014 Restructuring

9 May 2014 /// 07

A.T.U in figures

○ Founded by Peter Unger in 1985

○ Sales revenues: EUR 1.1 billion

○ 646 branches in Germany, Austria, the Czech Republic, Italy, Switzerland and the Netherlands

○ Around 11,000 employees

○ Product range of ca. 140,000 different items

Data and facts about A.T.U

A.T.U - Overview of the company

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2014 Restructuring

9 May 2014 /// 08

A.T.U: The master workshop

5.7 millionA.T.U auto repair shops handled more than 5.7 million maintenance and repair jobs in 2013. At the company's glass-facade workshops, customers can observe the speed and professional skills of A.T.U experts in real time.

A.T.U - Overview of the company

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2014 Restructuring

9 May 2014 /// 09

A.T.U's auto parts shops: comprehensive & with reas onable prices

15,000 itemsThe huge product range includes tyres and rims, motor oils, replacement parts and consumables, auto-care products, anti-freeze, tools, child seats, roof cargo boxes and bicycle racks, trailers, car radios and GPS units, scooters and bicycles.

A.T.U - Overview of the company

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2014 Restructuring

9 May 2014 /// 010

A.T.U logistics

60,000A.T.U's success is also based on logistics. Two distribution centres keep approximately 60,000 items organised. This means products can be delivered quickly to customers - and buying directly from manufacturers cuts out intermediaries and ensures favourable purchasing terms.

A.T.U - Overview of the company

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2014 Restructuring

9 May 2014 /// 011

The lorry fleet

15.6 millionA.T.U's fleet delivers 15.6 million sets of products to 646 branches each year. Merchandise management is a closed cycle: the lorries supply branches upon arrival and dispose of old parts on the way back.

A.T.U - Overview of the company

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2014 Restructuring

9 May 2014 /// 012

A.T.U's environmental approach

6.7 million95% of scrap materials collected by the A.T.U branches are disposed of at the company's own recycling plants. Each year, A.T.U recycles around 6.7 million old tyres. In addition, 26,500 tonnes of scrap metal and 3.7 million litres of used motor oil are recycled.

A.T.U - Overview of the company

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2014 Restructuring

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Agenda

1. A.T.U - Overview of the company

2. Restructuring liabilities and shareholders' equit y: background

3. Financial restructuring plan

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2014 Restructuring

9 May 2014 /// 014

Simplified corporate structure before transaction

o EUR 150 million junior bond at the level of the Investment Co

o Issuance of EUR 450 million of senior bonds (EUR 375 million + EUR 75 million) in October 2010 to refinance maturing bank loans

o EUR 45 million working capital facility with variable utilisation to finance working capital requirements

Holding Co (Holding GmbH)

Affiliated Co (Beteiligungs

GmbH)

Investment Co (Investment KG)

Trading Co (Handels KG)

(OpCo)

Oper. subsidiaries

Junior secured notesEUR 150 million (JSN)

Senior secured notes

EUR 450 million (SSN)

Working capital facility

EUR 45 million (RCF)

Lux Co

Profittransfer agreement

Restructuring liabilities and shareholders' equity: background

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2014 Restructuring

9 May 2014 /// 015

Restructuring A.T.U's corporate bonds

Maturity structure of A.T.U's financial liabilities before transaction

375 150

45

May

450

Jan MarFeb Jul SepAugJun

75

Apr Oct

Senior bonds(EUR 375 bond with 11% fixed interest rate, EUR 75 million bond with variable interest of 9.75% plus 6-month Euribor)

Junior bond(EUR 150 million bond with variable interest of 7.25% plus 3-month Euribor)

2014

RCF line(EUR 45 million with variable utilisation to finance working capital)

Restructuring liabilities and shareholders' equity: background

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2014 Restructuring

9 May 2014 /// 016

Restructuring of A.T.U's corporate bonds

Chronology of the restructuring

Restructuring liabilities and shareholders' equity: background

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2014 Restructuring

9 May 2014 /// 017

Agenda

1. A.T.U - Overview of the company

2. Restructuring liabilities and shareholders' equity: background

3. Financial restructuring plan

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2014 Restructuring

9 May 2014 /// 018

The restructuring plan at a glance

○ Package of measures designed to overcome the company crisis, thereby saving the A.T.U Group. Fresh money was injected into the company.

○ Substantial reduction in debt (including fresh money) and the associated future annual interest expense led to improvements in cash flow and the main loan covenant ratios

○ The three biggest investors in the secured note (Centerbridge, Goldman Sachs and Babson) entered as new shareholders, injecting fresh money to strengthen the company's capital base. KKR, previously the main shareholder, exited as an A.T.U Group shareholder

Financial restructuring plan

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2014 Restructuring

9 May 2014 /// 019

Main steps in the financial restructuring plan

Comprehensive reorganisation opinion on the A.T.U G roup's ability to be reorganised, based on IDW Standard S6

The previous shareholder waived in its entirety the shareholder loan in the amount of EUR 103 millionand completely surrendered its shares for EUR 1.

The A.T.U Investment KG (Investment Co) junior bond was released , leading to a EUR 131 million debt reduction . The remaining EUR 19 million were held by A.T.U.

As part of the debt-to-equity swap , the secured notes from A.T.U Handels AG (Trading Co) (EUR 450 million) were converted into preference shares in a new foreign holding company. In addition, around 92% of these bond creditors provided a total of EUR 109 million of new funds .

The working capital loan (EUR 45 million) and the bridg e loan (EUR 25 million) were repaid from funds provided by the new shareholders. At the same time, a new financing source provided a new working capital facility in the amount of EUR 25 million and a super senior loan in the amount of EUR 50 million.

Along with the remaining liabilities from the old senior bonds and the new borrowings, A.T.U's debt is therefore being reduced to EUR 160 million with a net cash inflow of around EUR 40 million.

1

2

3

4

5

Financial restructuring plan

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2014 Restructuring

9 May 2014 /// 020

Simplified Group structure and inclusion of the UK New Co in the SSN

o Merger of Affiliated Co (Beteiligungs GmbH) into Holding Co (simultaneous termination of the profit-and-loss transfer agreement)

o Absorption of Investment Co into Holding Co (& thus assumption of the JSN by the Holding Co)

o Inclusion of a UK New Co (newly founded by Trading Co) which acquires the status of an obligor of the SSN

Holding Co (Holding GmbH)

Affiliated Co (Beteiligungs

GmbH)

Investment Co (Investment KG)

Trading Co (Handels KG)

Oper. subsidiaries

EUR 150 millionJunior bond (JSN)

EUR 450 million

Senior bonds (SSN)EUR 45 million

RCF line

Lux Co

1. Merger

2.Absorption

3. New Co becomes obligor for the SSN

UK New Co Ltd.

Financial restructuring plan

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2014 Restructuring

9 May 2014 /// 021

"Flip-up" of the UK NewCo whilst maintaining obligo r status

o Equity investment in UK NewCo is transferred from Trading Co to the LuxCo

o Status of the UK NewCo as obligor of the SSN is maintained

Holding Co (Holding GmbH)

Trading Co (Handels KG)

Oper. subsidiaries

EUR 450 million

Senior bonds (SSN)EUR 45 million

RCF line

Lux Co

UK NewCo Ltd.(Obligor for SSN)

EUR 150 million

Junior bonds (JSN)

Financial restructuring plan

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2014 Restructuring

9 May 2014 /// 022

Transfer of German companies to UK NewCo

o LuxCo transfers the ATU Group's German companies to its subsidiary UK NewCoLux Co

UK NewCo(Obligor for

SSN)

HoldingCo (Holding GmbH)

Trading Co (Handels KG)

Oper. subsidiaries

EUR 45 million RCFEUR 450 million

Senior bonds (SSN)

EUR 150 million

Junior bonds (JSN)

Financial restructuring plan

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2014 Restructuring

9 May 2014 /// 023

Pre-pack administration sale to BidCo and release of old bonds

o UK NewCo applies for UK administration

o Court appoints the proposed administrators, who sell the equity stake in the Holding Co to BidCo

o BidCo provides the capital to repay the RCF

o SSN and JSN (including collateral and guarantees) released through the Inter-creditor Agreement

Lux Co

UK NewCo(Obligor for SSN)

Holding Co (Holding GmbH)

Trading Co(Handels KG)

Oper. subsidiaries

UKadministration

EUR 45 million RCFrepaid

EUR 450 million SSN

released

EUR 150 million JSN

released

Bid Co

Capital injection

Financial restructuring plan

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2014 Restructuring

9 May 2014 /// 024

Simplified Group structure after transaction

o Following the transaction, the A.T.U Trading Co, as the operating company, will be financed by a shareholder loan and a super senior loan providing a total amount of EUR 160 million

CayCo(Cayman)

HoldCo(Cayman)

BidCo(Lux)

A.T.U HoldingCo (Holding GmbH )

A.T.U Trading Co (Handels KG)

A.T.U subsidiaries

New owners

New junior instrument of the

former SSN holders

Shareholder loan

New senior instrument

(fresh money)

New super senior loan

Financial restructuring plan

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2014 Restructuring

9 May 2014 /// 025

Thank you very much for your attention!

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THE SHIPPING CRISIS

Wolfgang Topp, Head of the Restructuring Unit, HSH

Nordbank AG

9 May 2014, Frankfurt/Main

Proposals for a Solution

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The shipping crisis –

Proposals for a Solution

FRANKFURT, 09. MAI 2014

Wolfgang Topp

HSH NORDBANK AG

European Restructuring Day 2014

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Conrad Hilton1950-1951

John Warner1976-1982

Larry Fortensky1991-1996

Michael Wilding1952-1957

Michael Todd1957-1958

Eddie Fisher1959-1964

Richard Burton1964-1974

Richard Burton1975-1976

How many lessons

does it take to learn?

28EUROPEAN RESTRUCTURING DAY 09.05.2014

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What did banks and shipping companies not pay

enough attention to?

Basic attitude: “... it's not going to be as bad as that”

Banks

► Financing principles

► Permanent deployability of ships

► Changes in underlying economic conditions

► Quality of management

Shipping companies

► Business risks involved in newbuilds

► Strategic impact of changing underlying conditions

► Professionalisation of a shipping company's own business processes

► Creation of cost efficiency

29EUROPEAN RESTRUCTURING DAY 09.05.2014

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Where do we stand today?

high

lowTime

Insolvency

Strategic crisis Earnings crisis Liquidity crisisS

co

pe

fo

r a

cti

on

Shipping going through a typical crisis cycle

today2 years ago

Pro-active

strategies

► Focus:– improving

performance

– strategic options

– margin targets

– low time pressure

Safeguarding existence

► Focus on

– protecting liquidity, stabilising earnings

– managing stakeholder interests (shareholders and financers)

– heavy time pressure

30EUROPEAN RESTRUCTURING DAY 09.05.2014

5 years ago

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Opposing attitudes on restructuring for banks

Changed underlying conditions ... ... we must address

� Demands on capital resources are becoming more strict

� Accounting rules are constantly being tightened (IFRS 9 and 10, Basel III)

� Constant further development of restructuring standards (IDW, BGH)

� Rising cost pressure due to the increasing regulatory requirements

� Restructuring commences earlier or iscarried out faster

� Avoidance of consolidation as part of restructuring

� Renegotiation clauses, syndication deals as a firm element, shorter maturities

� Take losses earlier on restructuring cases with no prospect of success

31EUROPEAN RESTRUCTURING DAY 09.05.2014

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Restructuring models ready for series production

Bank

+ Maintain potential for write-ups

▬ Assume operating risks

Banks turn into shipping companies

Legacy owners

+ Clear wind-down path▬ No potential for write-ups

Legacy owners

+ No obligation to repay disbursements

▬ No potential for write-ups

Bank

+ Improved credit rating of owner(s)

▬ No write-up of long-termasset value

Rescue financing

Deutsches Frachtkontor

+ No funding risk▬ Limited return

Legacy owners

+ Purchase on low value date▬ No potential for write-ups

Bank

+ Recovery potential assured▬ Partial waiver necessary

Nautilus finance model

Investor

+ Fleet integration expenses ▬ High own credit rating for

refinancing

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Equity

Possible financing alternatives:

1. Single ship limited liability partnerships (KGs)

23.04.2014RU 33

Nautilus

Clear marketstrategy

Avoiding offinal losses

Participationin marketrecovery

Objectives of Nautilus transactions

Original loan amount

New structure

Loanrepayment

HSH Nordbank

HSH Nordbank

junior

tranche

HSH Nordbank x

New

senior loan

Liquidity

New working capital

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Possible financing alternatives:

2. Combined share and asset transactions

09.05.2014 34

Prev. shareholder New equity

� Re-sized debt on LTAV* basis� Waterfall for senior/junior

tranches

• Ship management• Debt-free• Platform for expansion

VESSELCOS

XY ships

PROPCO

Company XY

OPCO

Operating Agreement

German shipping companies:

► Break co. down into OPCO/PROPCO

► Adjust debt/transfer vessels to PROPCO

► Nautilus construct at PROPCO level

► New investors for OPCO and PROPCO

► OPCO platform can be used for further capital investments

� Current pipeline: around US$ 4 bn

� But increased risk of insolvency

� Limited effect on reducing the overall portfolio

� Germany is still a place to do maritime business

EUROPEAN RESTRUCTURING DAY

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Possible financing alternatives:

3. Investment fund cos.

35

Investment fund cos.

Banks Investment fund cos.

Banks

Investors

Current model: New model:

Management

Loan

Haircut

OwnershipNewCo

Fresh money

~~~~~~~~~~~~~~~~~~~~

~~~~~~~~~~~~~~~~~~~~

KG shareholders

Ownership

KG shareholders

► KG shareholders exchange shares for NewCo shares

► Banks that finance the ships grant haircut in return for NewCo shares

► New investors take over majority in NewCo as platform

► Exit for investors, banks and previous KG shareholders via IPO, for example

Shares

09.05.2014EUROPEAN RESTRUCTURING DAY

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Approaches to capacity managementD

isa

dv

an

tag

esA

dv

an

tag

es

► Reduced capacity in ongoing business

► Reduction in bunker costs

► Positive effect only on freightrates, not on charter rates

Slow steaming

► Scalable andtimewise flexible

► Basically suitable for large parts of the fleet

► Complex

► Legal (anti-trust) concerns

► Industrysolution/restruc-turing of pools asprerequisite

Laid-up ship model

► Sustainable impact

► Solves age structure and capacity problem

► Only suitable for ships with a net value close to scrap

► Possible problems with tonnage tax

Pre-sale scrapping

► Avoids ordering new ships

► Reduces bunker costs

► Short-term amortisation in some cases

► Charterer must pass lower operating costs on to charter shipping company

Refitting instead of new

order

► New orders possible without increasing capacity

► Time lag temporarily reduces capacity

► Only for liner companies

► Possible problems with tonnage tax

New business aginst

scrapping

36EUROPEAN RESTRUCTURING DAY 09.05.2014

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What strategic questions arise?

► Ship

– What technical requirements will apply in future (design,

motor, size, slow-steaming )?– Are there any sensible options for technical optimisation of

existing tonnage?– Impact of environmental requirements?

► Business model

– What is operational excellence in the areas oftechnical and business management?

– What requirements will liners have?– How do you get ready for the capital market?– What alternative sources of finance are available?– What size of company is economically viable?

► Market

– How will trade routes develop?– How can access to cargo be optimised?– Does it make sense to separate ship management from

ownership?

Technic

al

managem

ent

Route

optio

ns

Ship

Success

factors

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Lessons to be learned

► Development of new restructuring approaches and solutions forsector consolidation

► Compliance with financingprinciples

► Technical trainingfor staff

► Creating the necessary economies of scale

► Critical review of own business strategyand, if needed, systematic realignment

► Achievement of businessexcellence in fleet management

► Optimisation of the existing fleet

For the ship owners For the banks

► Joint tapping of alternative sources of finance

► Definition of uniformcriteria for improved assessment ofoperational excellence

► Setting up a competence centre forongoing monitoring of market trends and technical developments

38EUROPEAN RESTRUCTURING DAY 09.05.2014

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“ The objective of returning shipping to

profitability can only be achieved by going

beyond financial restructuring and

working intensively on addressing the

strategic issues.”

Wolfgang Topp, HSH Nordbank

39EUROPEAN RESTRUCTURING DAY 09.05.2014

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SEWING COMPANY ARRANGEMENTS

Paolo Bodo, CEO, Sixty Far East Ltd. (Miss Sixty)

Giovanni Nardulli, Legance Avvocati Associati

9 May 2014, Frankfurt/Main

The Miss Sixty Case, Italy

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SEWING COMPANY ARRANGEMENTS

The Miss Sixty Case

Paolo Bodo

Giovanni Nardulli

European Restructuring Day 20148-9 May 2014, Frankfurt

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INTRODUCTION

• In recent years the Italian Bankruptcy Law has been substantially revised inorder to improve the set of rules applicable to turn-around of insolventcompanies by way of an agreement with creditors (including the compositionagreement -Concordato preventivo- proceeding.

• The Concordato– a US Chapter 11-like proceeding – has been widely utilisedby Italian companies, especially in its “early petition” form (so-called“Concordato in bianco”), mainly due to its flexibility and its several advantages.

• The Miss Sixty case may be deemed as an example of successfulConcordatowith continuation of business (“Concordato preventivo in continuità aziendale”)in the context of an M&A transaction and provides an overviewof the keyissues which shall be addressed in the context of any such proceeding.

424242424242424242

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Part I

The Sixty structure before and after Concordato

43

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The Sixty Group before Concordato

44

Sixty S.p.A.

Murphy & Nye ItalyRetail S.r.l.

Sixty Italy Retail S.r.l.

Bank debt

Crescent HydePark(indirectly)

100%

100% 100%

Trademark license

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The Sixty Group after the Concordatotransfer

45

Sixty S.p.A.(in Concordato)

Crescent HydePark(indirectly)

Sixty Distribution S.r.l.(NEWCO)

Purchase Price

Transfer of Business and Employees (debt-free)

100%

Sixty Italy Retail S.r.l.Murphy & Nye Italy

Retail S.r.l.

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Part II

The growing number of Concordatoproceedings in Italy

46

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Concordatoproceedings by Early Petition (“Concordati in bianco”)number of petitions per quarter

47

New Concordato rules(September 2012)

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Non-bankruptcy procedures by type in the first half of 2013 in comparison with year 2011 and 2012

48

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The growing number of insolvency proceedings in Italy

• Recession and credit-crunch have increased the number of insolvencyproceedings.

• The growth rate of theConcordatoproceedings is significantly higher thanthe other insolvency proceedings (see slide 9).

• The main reason for the wide recourse toConcordatomay be found in itsseveral advantages as highlighted in the following slides.

49

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Part II

The main advantages of Concordato

50

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ConcordatoGeneral features

• TheConcordatois a court-supervised proceeding aimed at rescuing a companyin a situation of financial crisis by means of financial and/or operationalreorganisation.

• The company is essentially free to determine the content ofthe proposal to thecreditors which may be satisfied either by liquidation of the company’s assetsor by the proceeds of the sale of the business. Italian Bankruptcy Law sets outspecific provisions applicable to theConcordatowith continuation of business(“Concordato preventivo in continuità aziendale”).

• Generally, the proposal must ensure the entire payment of the secured claimsand a portion of payment (so-called “soglia concordataria”) of the unsecuredclaims. The proposal must be accepted by creditors holding the majority ofunsecured claims and is binding on dissenting creditors.

51

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Main advantages of Concordato

• Flexibility: the Concordatoproposal may be freely tailored by the companyand may allow,inter alia, the continuation, in whole or in part, of the existingbusiness.

• Early petition: the company may file very limited documentation while themain documentation (among which, theConcordato proposal and theConcordatoplan) shall be filed within a term fixed by the Court.

• Automatic stay: no enforcement or interim actions by the creditors over theassets of the Company starting from the filing of the petition (including theearly petition).

• Superseniority of claims: claims arising from: (a)interim financing dulyauthorised by the Court, (b) actions lawfully carried out bythe company, ranksupersenior.However, as far as the actions carried out after the filing oftheearly petition are concerned, the superseniority of claimsis conditioned uponthe delivery to the judge of the remaining documentation within the term fixedby the same and the actual issuance of the decree of opening oftheConcordatoby the Court.

52

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• Management of the company: the company management may regularlycarry out its day-to-day activities but any extraordinary transaction is subjectto prior authorisation of the Court. Once the petition is admitted by the Court,the management of the company is carried out under supervision of thejudicial commissioner.

• No bankruptcy claw-back action: The acts, payments and security interestcreated over the company’s assets in performance of theConcordatoare notsubject to bankruptcy claw-back action.

• Safe harbour from bankruptcy crimes: The directors of the company mayenjoy a safe harbour from certain bankruptcy crimes.

Main advantages of Concordato

53

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Part IV

The Miss Sixty Case

54

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Miss Sixty

55

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Murphy & Nye

56

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Trend Sixty Revenues

57

0

50

100

150

200

250

300

350

400

450

500

Year 2009 Year 2010 Year 2011 Year 2012

EURO MILLIONS

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• The financial indebtedness of Sixty S.p.A. was mainly unsecured andvis-à-visa fragmented number of Italian banks.

• The different size, nature and attitude of the banks was one of the main issuesto be dealt with by Sixty’s management during the negotiations in bonisof therestructuring.

• Due to failure to reach an agreementin boniswith such banks, Sixty S.p.A.filed an early petition for Concordato with continuation of business(“Concordato in continuità aziendale”).

The Miss Sixty Case – Main features

58

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• The continuation of business was essentially aimed at permitting theacquisition of two branches of going concern by a NewCo controlled byforeign shareholder and the sale of certain inventory.

• For the above purposes the foreign shareholder executed an irrevocablepurchase proposal, which was filed by Sixty S.p.A. along with theConcordato plan, the Concordato proposal and the other documentationrequired by law.

• The acquisition of the branches of going concern was “debt-free” pursuant toItalian Bankruptcy Law (see slide 5 above).

• The Concordatoproposal envisaged the entire payment of Sixty’s secureddebts and satisfaction of roughly 16 per cent of unsecured debts.

• The Concordatoproposal has been approved by a very high majority ofcreditors (86.7 per cent).

The Miss Sixty Case – Main features

59

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• Sixty has carried out a consultation procedure with the trade unions resultingin an agreement for reduction of work-force executed also before local andnational governmental authorities.

• The Concordato, and, in particular, the continuation of business granted thesaving of several jobs in Italy as opposed to bankruptcy.

• The trade unions agreement was essential for the approval oftheConcordatoproposal, since it provided Sixty with a significant leverage vis-à-vis thebanks.

• The Sixty Group is still pursuing a policy of development of its business inItaly also with the aim of increasing employment.

The Miss Sixty Case – Labour aspects

60

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Part V

Final considerations

61

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• The Miss Sixty Case is a perfect example of how the legal toolsprovided inthe Italian Bankruptcy Law may allow the turn-around of a company infinancial distress in the context of an M&A transaction.

• It is crucial to carry out negotiations and discussions withthe creditors,trade unions and (depending on the size of the company) localandgovernmental authorities in the early stages of the proceeding and alsoprior to the filing of the early petition.

• Concordatoprovides to the debtor leverage in negotiations with banks,unions and other stakeholders.

Final considerations

62

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CRITICAL SUCCESS FACTORS WITHIN THE RESTRUCTURING PROCESS

Hans Joachim Weidtmann, Managing Director, Head of

Group Intensive Care Corporates, Commerzbank AG

9 May 2014, Frankfurt/Main

(New) Rules of Corporate Restructuring

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Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt, 09.05.2014

Critical Success Factors within the Restructuring P rocess- (New) Rules of Corporate Restructuring -

Noerr LLP - European Restructuring Day 2014

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65Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Agenda

2. Regulatory Changes and their Impact on Restructu rings2. Regulatory Changes and their Impact on Restructu rings

1. Some Preliminary Remarks1. Some Preliminary Remarks

3. New Stakeholder and new Products are challengin g3. New Stakeholder and new Products are challengin g

4. Conclusion and Outlook4. Conclusion and Outlook

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66Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Agenda

2. Regulatory Changes and their Impact on Restructu rings2. Regulatory Changes and their Impact on Restructu rings

1. Some Preliminary Remarks1. Some Preliminary Remarks

3. New Stakeholder and new Products are challengin g3. New Stakeholder and new Products are challengin g

4. Conclusion and Outlook4. Conclusion and Outlook

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67Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Possibilities of treatment of stressed and disstres sed credit exposure

PassiveApproach

The bank ...

� ... does nothing and ...

� ... is prepared to accept that the borrowers files for an insolvency proceeding

� atypical case

ActiveApproach

The bank ...

� ... recognises the crisis at a early stage...

� ... initiates a restructuring of the borrower ...

� ... preferably „out of court“ but if necessary „in court“ as well ...

� ... and aims the retransfer of the company into the „normal“ business

= GRM-IC

Sale ofSingle Assets/Portfolios

The bank ...

� ... sells single assets and/or portfolios and ...

� ... is able to release riskcapital within a short period

=> GRM - IC

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68Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Primary objective of IC is the recovery of the client and the maintenance of a profitable client relationship

Philosophy and Role of Intensive Care

Rating and risk-related events (early warning syste m) drive the presentation of clients to GRM IC

GRM-IC is part of Credit Risk Management but acts autonomus from both Credit Officer and Client Relat ionship

IC is focused on the achievement of added value:

– decision on the restructuring strategy in each case individually on the basis of a restructuring concep t and the business model

– no lengthy restructurings if a restructuring seems not to be succesful

– no compulsory involvement of IC if the debt is full y collaterised

– no compulsory involvement of IC for clients with a positive development

Identification of economic crisis

Information to the client

Seem to be promising but fails

Restruc-turing had

been succesful

Retransferinto CRM

Active ExitManagement

Smooth Exit/ Work Out/Sale

Decision: Transfer into IC

Development and Validation of a Restructuring Concept

Decision: Restructuring seems to be promising

Restruc-turing

seems to be not

promising

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69Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Data- and Dataquality-

management

Analysis und Reporting

Portfolio- and Risk-Transparency

Corporate Center of the Commerzbank Group for stressed, disstressed and defaulted borrower of all segments within the Core Bank

Responsibilities of Group Intensive Care

Measurement of SLLP

Policies, Processes, IT-Systems

Methods and Policies

Execution of portfolio- and single

asset-transactions

(e.g. NPL-Trading,

Debt-to-Equity-Swap)

Portfolio-Management

(credit related) Client

Relationsship- and

Riskmanagement for stressed,

distressed and defaulted clients

Operational Restructuring Units

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70Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Agenda

2. Regulatory Changes and their Impact on Restructu rings2. Regulatory Changes and their Impact on Restructu rings

1. Some Preliminary Remarks1. Some Preliminary Remarks

3. New Stakeholder and new Products are challengin g3. New Stakeholder and new Products are challengin g

4. Conclusion and Outlook4. Conclusion and Outlook

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71Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Regulatory Changes: The Banking Landscape is influen ced by fundamental Regulatory Changes in the coming years

Basel III / CRD IV

Additional requirements for Equity, Liquidity, Leverage und Gearing.

Basel 2,5 (CRD III)

Increased capital rquirements for Risks from the Trading Book

EBA-Requirements

Temporary EBA Core Tier 1 Quota of 9% as per 30. June 2012

„Einlagensicherung“

In addition to existing instruments statutory protected deposits (up to 100 T€)

„Bankenabgabe“

Implementation of a „Financial Crisis Responsibility Fee“

IFRS 9

New rules for the measurement of SLLP´s (Specific Loan Loss Provisions)

Basel III Start 2013

2018 fully implementedIFRS 9EBA-Requirements

Basel 2,5/ Bankenabgabe

Einlagensicherung

Dez. 2011 Juni 2012 Dez. 2018Dez. 2010 Jan. 2015

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72Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

The 3 key aspects of Basel III: Capital, Leverage a nd Liquidity affect essentially the columns 1 an 3

Column 1

Minnimum Capital Requirements

Credit RiskMarket Risk

Operational Risk

Column 2

RegulatoryREVIEW PROCESS

All Risks

Column 3

MARKET-DISCIPLINE

All Risks

Standard-Approach

Internal Approach

Principles of an appropriate Risk

Management

Transparancy of Ris, Riskmanagement and

Equity

Quantitative Regulation

Qualitative Regulation

Regulation by th Market

Basel II

Implementation of a Leverage Ratio

Implementation of global Standards for

Liquidity Risks

Improvement of Equity

(Quantity and Quality)

Improved Measurement and Underlaying of Counterparty Risk

Reduction of Procyclicality and

Implementation of a Economic Buffer

Definition of Systemic Risks an Systemic

Banks

3

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73Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

The Calculation of the Capital Adequancy Ratio diff ers between Banks and Companies

Capital Adequancy Ratio of BanksCapital Adequancy Ratio of Companies

Equity of Banks

Risk-Weighted Assets(RWA)

Equity of Companies

Total Assets

Capital Ade-quancy Ratio

=Capital Ade-quancy Ratio

=

› Calculation Logic stable › Changes in the regulatory envirement will change the Capital Adequancy Ratio => Calculation Logic not stable

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74Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

…significant RWA – Differences within the Assets

P&L relevant Options

>><< Other

Assets Liabilities

Bankbilanz

RWA Management different RWA- and Equity Allocation for each instrument

high

low

Loans (uncollaterised

Investments

Trading Risk

Public Bondsnew : RWA Allocation for Marcet Price Risks

A

P&L Effects

Loans (collaterised)

Loans (securitised)

SCHEMATIC

Loans› to Banks › to Clients (Private &

Corporates)› to the Public Sector

Financial Asstes› Investments› Securities› … Equity

› subordinated› Core Capital

Provisions› e.g. Pensions

Deposits› from Clients (Private &

Corporates)› from Banks› Bonds

Trading Assets Trading Liabilities

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75Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Factors of Risk Capital Calculation (KSA / AIRB)

• Extended Acceptance of Collateral• Acceptance of „Standard Collateral“

• Different risk weights dependig on asset class , external rating and collateral1• Different risk weights dependig on asset class and external rating1)

Internal Rating Based ApproachCredit Standard Approach (KSA)

Basis: External Rating Basis: Internal Ratings

Standardapproach AdvancedIRB-Approach (AIRB)IRB-Basisapproach

PDInternal valuation

MPresetting of the Bafin

LGD Presetting of the Bafin

EaDPresetting of the Bafin

PDInternal Valuation

MInternal Valuation

LGDInternal Valuation

EaDInternal Valuation

Risk Weight

External Rating

PD( Probability of Default): Ausfallwahrscheinlichkeit LGD (Loss Given Default): Verlustquote bei AusfallEaD (Exposure at Default): Kreditbetrag zum Zeitpunkt des Ausfalls M (Maturity): Restlaufzeit1) unrated loans carry a fixed assignment of risk weight

The regulatory capital requirements are generally d ecreasing by the application of risk-sensitive methods of risk measurement

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76Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

The Cost of Risk Capital will increase under B - III

€ Mn. RWA5,000

4,000

3,000

2,000

1,000

0

CoC(bps)

300

200

100

0

Rating421 3 65

CCCBBB

Sub-Investment-GradeInvestment-Grade

RWA for EaD € 1 Mrd.Basel-III Cost of CapitalBasel-II Cost of Capital

Black-Book

Basel-III: 187bps

Basel-II: 110bps

∆ ~70bps

Example 4.6-RatingPD = 6,7%

Default

Grey-Book/ RestructuringWhite-Book

BBB≥ A

Quelle: BCG

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77Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

GLLP – in total

„White-/ Greybook“

SLLP/PLLP (imp.) in total

„Blackbook“

Components of Loan Loss Provisons based on IRFS tod ay

General Loan Loss Provision (GLLP)

IL** = IA X PD x LGD X LIP***

Specific Loan Loss Provision (SLLP)

SLLP = Book Value ./. Present Value of the CFs

Portfolio Loan Loss Provision (PLLP non impaired)

IL** = IA X PD x LGD X LIP***

Portfolio Loan Loss Provision (PLLP impaired)

RV = IA X 1 X LGD

Significant Loans

Non-Significant Loans

* Based on Basel II ** IL = Incurred Loss *** LIP = Loss Idenfification Period

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78Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Today: LLP – Accounting depending on IRFS Category

Loans and Receivables (LaR)

Held for Trading(HfT)

Revaluation Reserve(Neubewertungsrücklage

- NBR)

>><< Other

Assets Liabilities

Loan Loss Provisions

Results from Financial Investments

>><< Other

Loss Profit

Balance Sheet P&L

Trading Income

with Fair Value Option

Available for Sale(AfS )

Impairments

Impairments

Impairments

Impaiments

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79Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

In Future: IFRS 9 introduces new requirements which may have an impact on restructurings

Loans which do not consist of simple interest and p rincipal payments will be booked at „Fair Value“ and shown with a corresponding volati le figure in the P&L

Terms an Condition which are not in line with the “c ontractual cash flow-criteria“ (ccc)1) may have the same consequenses (regardless of the bussiness model: „Hold“)

Instruments which may support a financial restructu ring (e.g. hope notes; warrants) bears the risk that loans which had been booked wit hin the position „LaR“ before the restructuring have to be valued under „Fair Value“ af terwards.

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80Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Rules for Consolidation - before IRFS 10

0% 20% 50% 100%

Significant Influense

Dominant Influence

Investment Subsidary

Fair Value

(IAS 39)

At Equity

(IAS 28)Full Consolidation

(IFRS 10)

Associated Company

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81Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

IFRS 10: Introduction of a new Control Approach

Power-Criteria The Investor has power about all relevant activities.

Variable Returns-Criteria

The Investor get´s variable returns.

Relationship between Power and Return

The Power can be used to influence the returns.

The Cumulation of Power and variable Return leads to Control

Control (IFRS 10):

A unified approach for all typs of corporates; including SPE`s

1

2

3

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82Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Existence of variable returns from operation in connection with the power to manipulate the same.

Critical Instruments could be: „Hope-Notes, Warrants, Debt–to–Equity-Swaps etc.

The risk of consolidation may occur…

IFRS 10 since 2013 with Consequences for Restructur ings

Critical „Mandats“ could be:Supervisory Board, Steering-Committees, Creditors Committee´s (Gläubigerausschüsse?)

Critical „Sructure“ could be:SPE´s (Projekt-Financing, Ship-Financing, Fund-Structure)

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83Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Implementation of New Definitionen of non-performin g Exposures und Forbearance by EBA

* incl. non-material exposures >90 dpd

Non-Performing Exposures

› Differences between „NPE Defintion“ EBA and current „Default Definition“ of Commerzbank:

› Inclusion of LaR Bonds

› Inclusion of AfS Position

› Extension of 90 dpd definition

› Detailreporting for countries, sectors, accountinc categories, asset classes and differentiation between „Refinancing“, „Modifications“ and „Other“ necessary

Generic criteria:• past due more than 90 days • unlikely to pay (considering a minimum threshold)• all IFRS categories excl. HfT• all on- and off-balance exposures

90 days past due (not defaulted/impaired)

Non-performing exposuresPerforming exposures

3) Performing assets that have been renegotiated

Loans and debt securities which renegotiation of refinancing did not qualify as forbearance

1) Fully Performing

Loans and debt securities that not past-due, without risk of non-payment and performing off-balance sheet items

2) Performing assets past due below 90 days*

Loans and debt securities 1 - 30 days past dueLoans and debt securities 31 - 60 days past dueLoans and debt securities 61 - 90 days past due

Defaulted

Impaired

ForbearanceForborn loans and debt securities

(and eligible off-balance sheet commitments)

OtherRefinancingModification of

terms and conditions

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84Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Forbearance =„Concessions“ + Borrower in financial Difficulties

Definition of Forbearance1

1) EBA FINAL Draft implementing technical Standards - On Supervisory reporting on forbearance and non-performing exposures underarticle 99(4) of Regulation (EU) No 575/2013 - § 163 – § 183

§163

… Forbearance measures consist of concessions towards a debtor facing or about to face difficulties in meeting its financial commitments (“financial difficulties”)

§ 172:

Exposures shall be treated as forborne if a concession has been made …

Exposures shall not be treated as forborne when the debtor is not in financial difficulties . …

„Official Wording“

Borrower is in financial difficulties

Basic Principle

+

Concessions)

=

Portfolio has to be flagged as „Forbearance“ and has to be reported

Concretisation

§ 174 (… rebuttable presumption that forbearance hat taken place), measurements which took place if

> 30 Tage dpd within the las 3 month or

using “embedded forbearance clauses” if the bowwower had been > 30 dpd or to avoid 30 dpd

§ 164

a modification of the previous terms and conditions of a contract …

a total or partial refinancing of a troubled debt contract…

…that would not have been granted had the debtor not been in financial difficulties .

+

=

Translation

„Forbearance“

1. Duldung, Nachsichtigkeit, Unterlassung, Langmütigkeit

2. Stundung, Tilgungsstreckung

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85Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Agenda

2. Regulatory Changes and their Impact on Restructu rings2. Regulatory Changes and their Impact on Restructu rings

1. Some Preliminary Remarks1. Some Preliminary Remarks

3. New Stakeholder and new Products are challengin g3. New Stakeholder and new Products are challengin g

4. Conclusion and Outlook4. Conclusion and Outlook

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86Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

That was once: „Complex Interests due to Addresse es Diversity“

Management

Public / BaFin

Employees/Workers Counsil

SupplierShareholder

Financing Institutions

Approach GRM-IC

Goal

Mediation of a sustainable consencus

Going Concern of the Compny

Company

Credit Insurers

Banks

Lessor

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87Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Today Complexity looks sometimes like this:

Financial Instruments

„Classic“ Credit Products

Capital Markets Products

(Commercial-) Banks

Alternative Investors

Specialised Lenders

Bonds/

Promissory Notes

Equity –near

Instrumens

Loan to Own Strategists

Opportunistic

Investors

Collaterised / uncollaterised

German Law /

Foreign Law

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88Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

This Case Study is also from the past

Major Borrower„X-AG“ (HoldCo)

� Stock Market listed� > 50% of the shares

owned by one family� Several of

subsidiaries

Man

agem

ent-

beha

vior

Main Shareholder

Industry enviroment

Financing Institutions� 5 Core Banks

� 2 Bankin Syndicates

� Several pur „Long-Term-Banks“

� Several Lessors

� Several Credit Insurers

Financing Structure� Working Capital of the Group

via X-AG (cash-pool)

� Long-Term Debt

each in the operating susidiary

� Substantial collateral options

via subsidiaries only

Sanierungs-bedarf

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89Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Shareholder

Today I would imagine the following

Bond

Synloan

Currency Hedging

ABS-Factoring

Finance BV NL

Cash Pool

OpCoUSA

HoldCoD

OpCoD

OpCoI

Bilateral

SynLoan

OpCoPolen

Mezzanine

RingfencedFinancing

OpCoRUS

(HoldCo Garanty)

Bilateral

Shareholder Loan

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90Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Agenda

2. Regulatory Changes and their Impact on Restructu rings2. Regulatory Changes and their Impact on Restructu rings

1. Some Preliminary Remarks1. Some Preliminary Remarks

3. New Stakeholder and new Products are challengin g3. New Stakeholder and new Products are challengin g

4. Conclusion and Outlook4. Conclusion and Outlook

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91Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

(Re-) Thinking is required!?

In principle we are open to all measures which “pro mise a success”

As before, the restructuring „Out of Court“ is give n top priority. But by the ESUG the possibilities for „Plan B“ in some cases have signi ficantly improved. A good preparation is an essential prerequisite of an „In – Court – Restructur ing“

The regulatory framework and the „Stakeholder-Envir onment“ have changed dramatically. Creative restructuring- and work out- concepts are re quired.

The success of a restructuring unit is measured not only in the pure recovery rate but also on the improvement of PD-, EAD, and LGD – Rates, the re duction of „Grey- and Black – Book“, the RWA – Optimisation and the generation of revenues.

The customer, his recovery and the maintenance of t he client for the bank are the most important goals of IC but the structure have to opt imise the risk profile of the bank as well. This also means: in principle no lengthy restructur ing without any prospect of success.

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92Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Waivers Bank

We are open to all measures which “promise a succes s”

Defermentof Payments

Mezzanine

Standstill

“In Court” Restructuring

FreshMoney

Debt Equity-Swaps

Strengthening Collateral

PoolSubordination

InvestmentBanking, M&A,

High-Yield-Bonds,Synd. Loans

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93Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Thank you very much for your attention

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94Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014

Kontakt

Hans Joachim WeidtmannManaging Director

Commerzbank AGHead of GRM IC Corporates

Tel.: +49 69 136 - 4 46 64Fax: +49 69 79 53 69 911Mail: [email protected]

Adresse:Commerzbank AGGallusanlage 7D-60329 Frankfurt am Main

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DISTRESSINGBONDS

Martin Schoebe, LL.M., Partner, Insolvency Administrator

and Sequestrator, hww wienberg wilhelm

Insolvenzverwalter Partnerschaft

9 May 2014, Frankfurt/Main

The Global PVQ (formerly known as QCells)-

Case

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Distressing Bonds: The Global PVQ (formerly known as Q-Cells) Case.

Martin Schoebe, LL.M.

NOERR. European Restructuring Day 2014. Frankfurt/Main, 9 May 2014

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Frankfurt/Main, 9 May 2014 | 97

Today's topic:

The Global PVQ case ...

Before filing for

insolvency

Before filing for

insolvency

Course of the

proceedings

Course of the

proceedings

Upshot for bond

creditors

Upshot for bond

creditors

1. 2. 3.

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Frankfurt/Main, 9 May 2014 | 98

The Global PVQ team of the insolvency administrator.

Back office with a team of approx. 10 lawyers, etc.

Martin Schoebe, LL.M.

Communication to

creditors

Martin Schoebe, LL.M.

Communication to

creditors

Henning Schorisch

Insolvency Administrator

Henning Schorisch

Insolvency Administrator

Oliver Vahl

Proceedings

Management

Oliver Vahl

Proceedings

Management

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Bond creditors.

• Here: non-subordinated insolvency creditorsunder § 38 German Insolvency Code (InsO)

• Unsecured

• What's special about that?

• Distressing? Enriching!

Frankfurt/Main, 9 May 2014 | 99

A matter of perspective ...

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Global PVQ bond performance (approximately)

Frankfurt/Main, 9 May 2014 | 100

,000 €

10,000 €

20,000 €

30,000 €

40,000 €

50,000 €

60,000 €

70,000 €

80,000 €

90,000 €

Source: Finanzen.net

Q-Cells International Finance B. V.

WKN A1AG20

Global PVQ NL 09/14 CV

Q-Cells International Finance B. V.

WKN A1AG20

Global PVQ NL 09/14 CV

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Market: increasing overcapacity since 2008.

Frankfurt/Main, 9 May 2014 | 101

Capacity in GWp

6 7

19

2731

7

13

25

40

50

2008 2009 2010 2011 2012

= 19= 19

= 13= 13

= 6= 6

= 6= 6

= 1= 1

Market volume

Production capacity

Overcapacity

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Global PVQ was subject to strong fluctuations in revenue.

Frankfurt/Main, 9 May 2014 | 102

Revenue in EUR millions

,0

200,0

400,0

600,0

800,0

1000,0

1200,0

1400,0

2008 2009 2010 2011

-37%

+71%

-25%

• 2008: dynamic growth until 2008

• 2009: decline in revenue due to decrease in volume and price

• 2010: disproportionately high growth due to expansive fiscal policy

• 2011: decline in revenues (background: excess supply)

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Global PVQ before filing for insolvency.

Frankfurt/Main, 9 May 2014 | 103

• Swap for bonds

• Measures to reduce costs

• Capital writedown

• Waivers by different parties

• Temporary production cutback in Germany and Malaysia

• Mass production in Malaysia only

Measures in 2011:Measures in 2011:Planned financial

restructuring:Planned financial

restructuring:

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Frankfurt/Main, 9 May 2014 | 104

The proceedings: milestones.

filing for insolvency

preliminary insolvency administrator

filing for insolvency

preliminary insolvency administrator

institution of insolvency proceedings

institution of insolvency proceedings

first creditors' meeting

first creditors' meeting

second creditors' meeting

second creditors' meeting

meetings of the creditors' committee

meetings of the creditors' committee

3 Apr 20123 Apr 2012 1 Jul 20121 Jul 201218 Jul 201218 Jul 2012

15 / 29 Aug 201215 / 29

Aug 2012

third creditors' meeting

third creditors' meeting

29 Aug 2013

29 Aug 2013

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Global PVQ financed itself via three bonds.

Frankfurt/Main, 9 May 2014 | 105

Volume(in Mio. EUR)

InterestDenomination

(in EUR)

2012Q-Cells International Finance B.V.

492,50 1,375% 100.000,00

2014Q-Cells International Finance B. V.

250 5,75% 100.000,00

2015Q-Cells SE

128,7 6,75% 4,38

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Frankfurt/Main, 9 May 2014 | 106

• Members

• Non-disclosure duties

• Cooperation in the interests of all creditors

Creditors' committeeCreditors' committee

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Joint representative:

• Which law controls?

• Applicability of the German Bond Act (SchVG)

• Dealing with the existingjoint representative

Frankfurt/Main, 9 May 2014 | 107

Bond creditors ... ... with the joint representative

Bond creditors ... ... will be approached directly:

Insolvency Administrator

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Insolvency plan:

• Joint representative's role?

• Accompanying insolvency planand distribution

Frankfurt/Main, 9 May 2014 | 108

Accompanying insolvency plan – new since

the introduction of the German Act for Further

Facilitating the Restructuring of Companies

(ESUG) as at 1 March 2012.

NEW:Accompanyinginsolvency plan

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Insolvency proceedings vs capital markets law.

Frankfurt/Main, 9 May 2014 | 109

Confidential information Transparency

Creditors' collective insolvency

proceedings

Creditors' collective insolvency

proceedings

Market interestsMarket interests

Duties under

capital markets law

Duties under

capital markets law

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Preparation of creditors' meetings:

• Relationship withcreditors' committee

• Language, approach and consultation

• Preparation

Frankfurt/Main, 9 May 2014 | 110

Bond creditors ... ... will be approached directly:

Insolvency Administrator

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Who is a creditor?

Frankfurt/Main, 9 May 2014 | 111

• Company in the Netherlands

vs

• Company inGermany

1. “Double Dip”1. “Double Dip”2. Insolvency schedule vs

trading2. Insolvency schedule vs

trading

procedure for defining creditors

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Summary

• Bond creditors are no different than any other creditors

• They have a special need for information

• The primary interest is in swift and successful proceedings.

Frankfurt/Main, 9 May 2014 | 112

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Thank you!

Frankfurt/Main, 9 May 2014 | 113

Martin Schoebe, LL.M.

Partner,

Insolvency Administrator, Attorney at Law,

certified specialist in insolvency law

hww wienberg wilhelm

Insolvenzverwalter Partnerschaft

Ainmillerstraße 11

D – 80801 Munich

T +49.89.18 93 77-0

F +49.89.18 93 77-50

E [email protected]

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Frankfurt/Main, 9 May 2014 | 114

With nearly 350 employees (including some 80 professionals), the hww Group is represented nationwide at over 20 locations in Germany.

hww wienberg wilhelm also has an international network of 27 cooperation partners. hww insolvency cooperation partners is an association of

international insolvency specialists who cooperate closely with hww's German insolvency administrators, consultants and lawyers, and are available on site when needed.

International cooperation partnersOffices in Germany

Cooperation partnersOffices

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EUROPEAN RESTRUCTURINGDAY 2014

9 May 2014, Frankfurt/Main

Refinancing and Restructuring Trends for

2014/2015