EQS Group-News: Dynamics Group AG
/ Key word(s): Statement/Corporate Action
01.12.2019 / 05:59
Open letter to Dr. Martin Haefner
Dear Mr Haefner
We share your concern about the future of Schmolz+Bickenbach (S+B). The company urgently needs money, everyone - including Liwet - agrees. However, there is still time to find a constructive solution for S+B that is in the interest of all, not only one particular shareholder. Liwet is ready to rescue the company and the 10,000 jobs. Liwet is ready to inject as much money as necessary for the company to survive. Liwet calls all shareholders to join forces to find a solution that can guarantee a better future for the company and its stakeholders.
The solution must meet two conditions:
1. The solution must be fair to everyone. Therefore, equal treatment of all shareholders, as prescribed by law, must be guaranteed. You, Mr. Haefner, with a 17.5% stake in S+B, cannot alone dictate the conditions to all the other shareholders representing an 82.5% stake.
2. The solution cannot result in a change of control. Otherwise the money essential for the support of the company will not be used for operational needs but rather to immediately buy out the corporate bonds maturing only in 2022. This is not helpful for the company. Rather, it allows you, Mr. Haefner, to take control of the company at a lower price by violating other stakeholders' interests.
Unfortunately, Liwet has so far not received a transparent explanation from S+B itself, neither from the management nor from the Board of Directors of S+B, as to how large the liquidity requirement really is. The only estimate was given last week. According to a statement that the CFO & Member of the Executive Board of Schmolz+Bickenbach, Matthias J. Wellhausen, made during the conference call with analytics on November 21, the company seems to need just "EUR 100m to EUR 150m" to support the current liquidity position.
The Board of Directors and the management, with the support of the shareholders, should carry out a thorough analysis of all company resources for unclosing hidden reserves. For example, Liwet sees opportunities in the optimization of operational processes, granting shareholder loans, destocking of inventories or the disposal of non-core assets. Nevertheless, the Board of Directors has not yet submitted a restrucuturing plan worthy of the name. Instead, you are panicking.
This is the timeline of the alleged "bankruptcy risk":
August 7: S+B's half-year report did not contain any indication of a situation threatening the company's existence. It even predicted a gradual recovery by the end of the year.
September 11: Only five weeks after the semi-annual report, a profit warning was issued.
September 20: The CEO of S+B said in "Finanz und Wirtschaft" that there are "no problems with the banks" and that a capital increase is not planned.
October 23: New profit warning and announcement of an Extraordinary General Meeting with the agenda item capital increase, on your terms.
November 11: Invitation to the General Meeting without any indication of impending bankruptcy and without concrete proof of capital requirements and use of new funds.
November 25: Decision of the Swiss Takeover Board not to grant you a restructuring exemption, as this would represent a serious encroachment on the rights of all other shareholders.
November 26: You, Mr. Haefner, threaten in "Finanz und Wirtschaft": "Rejecting the capital increase at the Extraordinary General Meeting on 2 December would be tantamount to going to the bankruptcy judge the next day."
With the threat of bankruptcy, you are trying to take the other shareholders, the Swiss Takeover Board and the FINMA Financial Market Supervisory Authority and even the company itself as hostages and force them to agree to your plan to gain control of the company by evading Mandatory Tender Offer (MTO).
Dear Mr Haefner, instead of threats, we want facts. Instead of attributing blame, we want solutions. And we want answers to the following questions:
- How will your plan improve S+B's situation after the capital increase, apart from hiring "outstanding" professionals in any sectors except the steel industry?
Dear Mr. Haefner, the decisive question is a question of conscience: Are you concerned about the well-being of the company and all shareholders, or are you concerned solely with controlling the company? The more dramatically you describe the situation of S+B, the more favorable the takeover of control will be, diluting and devastating other shareholders - is that your calculation?
As we said at the beginning, Liwet offers solutions. We are ready to inject the amount that is really required to ensure the existence of the company and to look for a viable solution that will help secure 10,000 jobs.
The cornerstones of our proposal remain the same as when it was first introduced to the Board of Directors but rejected as contradicting your plan for taking control of the company. A capital increase must be realized, avoiding a change of control and giving an opportunity for all shareholders to participate pro-rata. Liwet as well welcomes if you, Mr Haefner, or any other shareholder increases their stake up to 33%. Liwet is also ready to discuss the composition of the Board of Directors for working out a plan to save S+B.
But we cannot say "yes" to an approach that pursues unilateral interests and discriminates against 82.5% of the shareholders.
Board of Directors of LIWET
- Following your announcement of an unavoidable insolvency of S+B, the share price fell significantly. Why are you so sure about an inevitable bankruptcy? And why were the shareholders and the public not informed about this price-relevant assessment of impending insolvency?
- How do you, as a Vice-Chairman and member of the Audit Committee, explain a lack of mention of the financial emergency of S+B in the semi-annual report of 7 August 2019?
- What would S+B's financial situation look like if the bond had to be repaid in full?
- One month after the CEO said that a capital increase is not planned, up to CHF 614.25 million will suddenly be required. Please explain to us and other shareholders how the economic situation of S+B has deteriorated so much in just five weeks?
- The last Board meeting took place on November 11. Neither the decision of the Swiss Takeover Board nor the alleged plight of the company have been discussed by the Board of Directors so far, as it appears from company media releases. What is the Chairman, who is very close to you, doing?
End of Corporate News