Thank you for your interest and the trust you have placed in us. In this section you will find the information for bondholders.
Ekosem-Agrar AG is the parent company of the Ekosem Group. The companies of the Ekosem Group are operationally active exclusively in the territory of the Russian Federation. The issuer originally planned to refinance the 2012/2022 bond with a volume of EUR 78 million on the capital market this year. The surprising Russian invasion of Ukraine, the sanctions imposed on Russia and the Russian counter-sanctions and the resulting economic and political implications made such a refinancing impossible.
According to statements by the Company, this situation is exacerbated by capital controls, which are currently intended to prevent the transfer of the necessary funds from the Russian operating subsidiaries to the issuer to settle the interest receivables. In addition, there would be a risk that assets held by foreign persons or companies in Russia would be nationalized, especially if they are companies whose activities are considered important for supplying the Russian population.
After the necessary quorum of 50% was not reached at the first bondholders’ meeting for the 2012/2022 (ISIN: DE000A1R0RZ5) and 2019/2024 (ISIN: DE000A2YNR08) bonds on May 09, 2022 and May 10, 2022, the Company is inviting to a second bondholders’ meeting on May 30, 2022 and May 31, 2022 for the aforementioned bonds. In addition to the original motions of Ekosem-Agrar AG, this provides for a counter-motion by the creditors’ advisory council, consisting of Mr. Markus Kienle, lawyer and member of the board of directors of Schutzgemeinschaft der Kapitalanleger e.V., Mr. Hans-Jürgen Friedrich, member of the board of directors of KFM Deutsche Mittelstand AG and Mr. Dirk Heinrich Hermann Klitsch, member of the board of directors of Goldberg Holding SA.
1. previous resolutions on the bonds
a) Appointment of a joint representative (only bond 2012/2022)
The e. Anleihe GmbH is to be appointed as joint representative. The remuneration shall in principle be borne by the Company. However, in the event of insolvency proceedings, the remuneration would be paid from the satisfaction quota attributable to the bondholders, with an hourly rate of EUR 400 plus VAT.
b) Reduction of interest, qualified subordination, extension of the term and clarification regarding termination rights
The interest rate is to be reduced retroactively from December 07, 2021 and August 01, 2021 from 8.5% and 7.5% to 2.5% p.a. respectively. The interest payment claims are to be subordinated to all existing or future claims of creditors. In addition, the term is to be extended by 5 years to December 06, 2027.
c) Adjustment of the provisions on a change of control
The events provided for in the bond terms and conditions for exercising a repayment option are to be excluded. This includes, among other things, a change of control.
d) Separate authorizations of the joint representative
The joint representative is to be granted separate authorizations, including the authorization to decide on the deferral of claims and to declare a temporary exclusion of termination rights.
2. counter-proposal by the creditors’ advisory council
a) Reduction of interest and deferral option
The interest rate is to be reduced to 2.5% p.a. with retroactive effect from 07.12.2021 or 01.08.2021. However, these interest payments shall not constitute subordinated claims, but may be deferred at the discretion of Ekosem-Agrar AG. There is only an obligation to consult with the joint representative and the creditors’ advisory council prior to the deferral. However, Ekosem-Agrar AG is not bound by this recommendation in the context of its decision.
b) Extension of the term and possibility of a recovery in value
The terms of both bonds are to be extended by 5 years in each case. Ekosem-Agrar AG is to be entitled to call them in at any time. Depending on the date of redemption, a write-up of up to 136% or 140% of the nominal amount is planned.
c) Change in the quorum for exercising the repayment option put
No exclusion of the exercise of the put redemption option is provided for. However, the required majority for the effective exercise of the put redemption option is to be increased to at least 51% of the total nominal amount of the respective bond.
d) Separate authorizations of the joint representative
The joint representative is to be granted separate authorizations, including the authorization to decide on the serious calling in of claims due, to declare a temporary exclusion of termination rights, and to defer or not seriously call in all claims relating to the early redemption option Put.
Like the Company, the Creditors’ Advisory Board and the private and institutional investors, One Square supports efforts to avoid insolvency. Insolvency would very likely result in a total default for the structurally subordinated bondholders.
However, we do not see any significant improvement in the position of creditors in the countermotions. For example, there is still no provision for a shareholder contribution and the proposed resolutions are exclusively for the benefit of the shareholders.
Our main criteria points are:
- The interests of the bondholders are not represented independently and forcefully. The joint representative proposed by Ekosem-Agrar AG for the 2012/2022 bond runs into an open conflict of interest due to the structural subordination of the 2019/2024 bond and therefore cannot be a joint representative of both bonds.
- Neither proposed resolution provides for a shareholder contribution. The adjustment is to be made entirely at the expense of the bondholders. Ultimately, this only increases the value of the company shares at the expense of the bondholders.
- The interest rate reduction is not comprehensible. The only conceivable option would be to defer the interest rate in the event of full value settlement in order to bridge the current situation until smooth payment transactions with Russia are possible again.
- A five-year extension is tantamount to refinancing and is not appropriate at these conditions. In this case, the bonds should be extended moderately by approx. 2 years in each case and the situation reassessed at the end of this period – also, a complete exclusion of the cancellation rights is not necessary and would take the repayment and maturity completely out of the hands of the bondholders and place it at the free discretion of Ekosem-Agrar AG.
- The concept of value reinstatement is also not appropriate. Insofar as deferrals are made, the entire amounts plus compound interest must be made up.
- It is not necessary to exclude termination rights. It would be sufficient to extend certain deadlines, such as the deadline for submitting annual financial statements.
- Agreeing to exercise the repayment option put is the wrong approach. The put must be preserved so that bondholders can effectively assert their rights.
- If necessary, a vote to suspend is preferable.Finally, the powers of the joint representative must be adapted to the “new” proposed resolutions.
A detailed evaluation and comparison of the Company’s proposed resolutions and the countermotions can also be found in the form of a presentation here on our website.
If the proposed resolutions are not adjusted by the time of the creditors’ meeting in the interests of a balanced distribution of the burdens, we will recommend that the bondholders we represent do not participate in the vote. This is to prevent the quorum of the creditors’ meeting as well as a vote and to give the Company the opportunity to come before the creditors again with a balanced proposal.
However, One Square is ready at any time to enter into discussions with the company and to work out a balanced restructuring concept that can be approved and that adequately takes into account the interests of the bondholders until the second creditors’ meeting.
You can support this plan by contacting One Square at firstname.lastname@example.org register.
registrieren. Dort erhalten Sie ebenfalls weitere Informationen sowie ein Vollmachtsformular. Aufgrund der langen Bearbeitungszeiten bei den Depotbanken empfehlen wir unbedingt zeitnah einen Sperrvermerk zu beantragen.
There you will also receive further information and a proxy form. Due to the long processing times at the custodian banks, we strongly recommend applying for a blocking notice in a timely manner.
With best regards
Your One Square Ekosem Team