MIFA Sale Moving Forward
SANGERHAUSEN, Germany — The sale of a minority stake in MIFA Mitteldeutsche Fahrradwerke AG cleared a hurdle on July 23rd as holders of the listed German maker’s bond agreed to defer an interest payment due next month and appointed a Munich-based restructuring specialist to negotiate with company executives about a mooted write down of the 25 million euro debt security.
In a vote taken at the offices of Klaus Ehrich GmbH, an auditing and tax consultancy in Sangerhausen, bondholders agreed to push back the payment to end-October, when MIFA executives are due to deliver their plan to right the loss-making company’s finances. The meeting, attended by representatives of 28.1% of the holders of the MIFA bond, was made necessary when an online poll held in June failed to produce the 50% quorum needed to make its results binding.
Hero Cycles demands writedown
In addition to delaying the interest payment due in August on the year-old debenture, cut when MIFA officials reported banner half-year sales for 2013, bondholders appointed Munich-based One Square Advisory Services GmbH to negotiate on their behalf. India’s Hero Cycles has made its proposed acquisition of a 47% stake in MIFA contingent on a writedown of as much as 80% of the value of the bond.
MIFA blamed errors in inventory accounting for failing to meet year-end guidance for 2013, when the company surprised investors with a 15 million euro loss. Reported in March and coupled with an announcement that CEO Peter Wicht was taking a leave due to an undisclosed illness, the news sent the value of MIFA shares on the Frankfurt Stock Exchange down by two-thirds and where they have remained in the intervening months.
Hero: 15 million euro cash injection
Hero Cycles, one of the world’s largest maker, has offered a 15 million euro cash injection in trade for the MIFA stake. However, the paucity of information forthcoming from MIFA as executives Stefan Winegar and Hans-Peter Barth – who are shepherding the company in Wicht’s absence – craft their restructuring plan caused Germany’s FERI EuroRating Services to suspend its investment-grade evaluation of the MIFA bond in early July.
In a release issued following the bondholder meeting, Weniger called the outcome “an important signal” and added that “other important financing partners” would be included in future discussions. This presumably is a nod to German financier Carsten Maschmeyer, whose family and the management company he controls together hold around 28% of MIFA shares.