2011 annual report - ALNO

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120Consolidated financial statements | Events after the closing dateImplementation of a long-term capitalization andfinancial conceptSince late 2011, the Board of Management has been workingon the implementation of a long-term capitalization andfinancial concept. The main pillars of this concept are theconclusion of a further restructuring agreement by mid-July2012 at the latest and a capital increase in autumn 2012.especially in other countries. A funding commitment bythese new banks is scheduled to coincide with the conclusionof restructuring agreement III.The Group's factoring volume is to be further increasedby another EUR 15 million through the sale of accountsreceivable by ALNO AG.This restructuring agreement III will provide for further contributionsby the main shareholders Küchen Holding GmbH,Munich, and IRE Beteiligungs GmbH, Stuttgart, as wellas by the main banks financing the ALNO Group and thesupplier Bauknecht Hausgeräte GmbH, Stuttgart. Amongother things, the contributions by Bauknecht HausgeräteGmbH, Stuttgart, also include an extension of paymentdeadlines to ensure that the liquidity of the ALNO Groupremains assured until the restructuring agreement III andcapital increase have been implemented in autumn 2012.Conclusion of the restructuring agreement III will significantlyimprove Group equity and permit full repayment ofthe main banks. Repayment of the banks' financing withthe aid of old and new investors is an essential prerequisitefor the scheduled capital increase, which will be part of therestructuring agreement III.Existing bank loans payable by the ALNO Group will betaken over and repaid by old and new investors in the firststage of the restructuring agreement III. This stage will inpart be financed through a bond issue by ALNO AG. Inthis way, the existing accounts payable to banks will bereduced to less than 10%.The second stage involves increasing the share capital ofALNO AG and must be decided by the Annual GeneralMeeting in August 2012. This capital increase is to beeffected through both cash and non-cash contributions.The non-cash contribution will take the form of a "debt-toequityswap" in which the loan receivables taken over byold and new investors are paid in, insofar as they are notfinanced through the aforementioned bond. Since the collateralprovided to date will be released through repaymentof the existing sums payable to banks, it can be used totake out new loans in the future, insofar as it is not neededfor issuing the bond.The Board of Management is already conducting specificfinancial talks with banks which have not provided fundingto date. The liquidity provided by these new bank loanswill be used to finance the ALNO Group's planned growth,In addition, the Board of Management is holding out theoption of applying for a guarantee furnished by the Landgovernment of Baden-Württemberg following the conclusionof restructuring agreement III which would open upfurther potential for financing.In mid-May 2012, ALNO AG's Board of Managementobtained written, non-binding declarations of intent fromthe main shareholders, the main supplier Bauknecht HausgeräteGmbH and both old and new investors confirmingtheir support for the long-term capitalization and financingconcept outlined above. These declarations of intent areto be transformed into a binding restructuring agreement IIIby mid-July 2012, together with the planned restructuringcontributions of the main syndicate banks.Update of the original reorganization assessmentof 24 June 2010 by PricewaterhouseCoopersPricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft("PwC") was retained in early 2010 to prepare a reorganizationassessment for the ALNO Group in accordancewith statement IDW S6 of the German Institute of Auditors.In their assessment of 24 June 2010, PwC confirmed theALNO Group's prognosis as a going concern as long asfinancing is assured in accordance with the restructuringagreement I of 23 April 2010 and as long as the requiredmeasures are implemented within the framework of thecorporate planning.In spring 2011, PwC was requested to update their reorganizationassessment for the ALNO Group. In the updatedreorganization assessment of 13 May 2011, PwC foundthat the ALNO Group is fully financed so far as could beestablished at that time and subject to certain conditions,and that there were no changes as regards the statementsmade in the reorganization assessment of 24 June2010. However, PwC did point out that the ALNO Group'srestructuring would take longer than had been planned inthe previous year.In November 2011, PwC was mandated to undertake anupdate of their reorganization assessment for the ALNO
Consolidated financial statements | Events after the closing date121Group. Since the operational and financial reorganizationconcept was still in the planning stage, PwC was unableto make any statement in their draft of 9 March 2012 as tothe ALNO Group's ability to be restructured and continuedas a going concern.• Subject to the assumptions made and provided that aliquidity buffer of at least EUR 5.0 million is permanentlymaintained, the company's liquidity is assured for theperiod thereafter, i.e. from September 2012 to the endof June 2013.On the basis of this mandate, PwC was therefore requestedin late April 2012 to follow up on an existing analysis ofthe short-term liquidity planning until mid-July 2012 andverify the plausibility of the Group's liquidity planning upto mid-2013.In their "Plausibility verification of liquidity planning up tomid-2013" dated 29 May 2012, PwC has taken account ofthe risks identified when verifying the plausibility of corporateplanning in their conservative "Adjustment Case" whichalso includes measures from the planned capitalization andfinancial concept (refer to the section on implementation ofthe long-term capitalization and financial concept).In their statement on liquidity planning up to mid-2013,PwC drew attention to the following points:• The management's short-term liquidity planning showsthat the current agreements reached with suppliers ondeferral of payments and the stand-still agreement concludedwith the banks and a another financial partnerhave assured the ALNO Group's liquidity until 20 July2012.• Very different stages have been reached as regardsimplementation and negotiation of the various measurescontained in the capitalization and financial concept. Thisconsequently makes it impossible to assess the feasibilityof all the measures in the concept. However, PwC doesnot consider the measures to be obviously infeasible.In addition, PwC also drew attention to the following essentialassumptions and risks in the liquidity planning up toJune 2013:• The financial concept must be implemented without faildespite the risks associated with the feasibility of individualmeasures. At the time of making the statement,investors have only issued declarations of intent whichhave still to be checked in legal and financial terms. Allother measures are under negotiation or in planning.• The possibility that the measures will not be implementedin good time to assure the ALNO Group's further liquidityconstitutes a risk. The most important and majorityof measures must therefore be implemented without failbefore the agreements on deferral of payments and thestand-still agreement expire on 20 July 2012, as considerablyhigher liquidity will be required as from the endof July 2012 due to the plants' summer break and thishigher liquidity cannot be covered without the plannedinflows from the financial concept.• Some of the planned but hitherto postponed investmentswill have to be made in the second half of 2012.• The relationship or situation prevailing with domesticcredit insurers and suppliers is strained. The liquidityplanning is based on the assumption that both will notintroduce terms of payment which are less advantageousfor the company than those at present or planned.• On the basis of the so-called "Adjustment Case", closingall plants for the summer break between mid-July andmid-August 2012 indicates that the Group's liquidity isnot assured and payments may be halted during thisperiod unless other internal and/or external measures aretaken. The management of ALNO AG is therefore alreadyconducting initial negotiations with a major supplier inorder to improve the company's liquidity.The Board of Management of ALNO AG has in the meantimetaken further steps to specify and implement thecapitalization and financial concept in more detail. Amongother things, these include negotiations with the financingbanks over repayment of the existing loans and credit lines,as well as negotiations with new financial partners to obtainfresh funds. The negotiations with shareholders from whommajor restructuring contributions are expected under thecapitalization and financial concept have for the most partbeen concluded.
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2011 annual report - ALNO

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