Hero Cycles acquires 47% stake in Germany’s MIFA
In a bid to become a major global player, Hero Cycles has purchased a 47% stake in Germany‚Äôs largest bicycle maker Mitteldeutsche Fahrradwerke AG (MIFA). This is the company‚Äôs first overseas purchase and the bike maker has invested ‚ā¨15 million ($19.8 million or Rs 119.5 crores) through its subsidiary OPM Global B.V.
105 year old German cycle maker,¬†MIFA is currently loss-making firm, part of these funds will go towards working capital requirements. This new venture is expected to bring about a combination of technologies which will go a long way in ensuring that Hero rises to the top of the global cycle market which as on date is worth $49 billion globally.
This liaison with Hero Cycles comes at a time when MIFA, a leading German bicycle manufacture is ridden with debts that were taken for new investments and for the development of high end bikes. As a part of this new partnership, MIFA will be issuing about 4.9 million shares to Hero Cycles through OPM Global while a rights issue will also be made in the coming months.
Hero Cycles has an annual turnover of INR 2,000 crores. It is a major player in the bicycle sector in the country with exports to over 90 global markets. Besides sharing of investment, the partnership between Hero Cycles and MIFA will also involve the sharing of R&D facilities where electric bikes are concerned.
Reorganisation has reached the home straight
Sangerhausen, 22 August 2014 ‚Äď As communicated in its ad hoc announcement published today, MIFA Mitteldeutsche Fahrradwerke AG (WKN share: A0B95Y / ISIN share: DE000A0B95Y8, “MIFA”) has today taken an important step towards its financial reorganisation. MIFA, One Square Advisory Services GmbH, the Joint Representative of the holders of the 2013/18 bond (WKN bond: A1X25B / ISIN bond: DE000A1X25B5, “MIFA bond”), and OPM Global B.V., a subsidiary of Indian bicycle manufacturer Hero Cycles Ltd. (“HERO”), have today signed a basic agreement relating to the financial reorganisation.
Pursuant to this basic agreement, and as communicated in today’s ad hoc announcement, further steps are to be taken for the financial restructuring of the MIFA bond and measures relating to MIFA’s equity. Following a reduction of the share capital in a 1:100 ratio (“capital write-down”), a so-called debt for equity swap is to be implemented, entailing adding EUR 15 million of the total nominal amount of the MIFA bond to MIFA’s equity.
Dr. Stefan Weniger, Chief Recovery Officer (CRO) at MIFA, regards the basic agreement as a decisive step towards the company’s further restoration to financial health: “Following intensive and constructive negotiations, the agreement that has been reached today sends more than a positive signal for all involved. In particular, the reorganisation structure that has now been agreed shows how determined the negotiating partners have been to find a solution which is compatible for all sides, and which forms the basis for MIFA’s long-term future. We have now found such a solution. Thus, the reorganisation of MIFA has reached the home straight.”
Following the debt for equity swap, MIFA is to receive additional equity of at least EUR 15 million in the form of cash capital increases that are to be mainly subscribed for and underwritten by OPM Global B.V., a subsidiary of HERO. “The considerable strengthening of MIFA’s equity base also sends an important signal to our employees and business partners. With HERO, we have gained a strategic investor that believes in MIFA’s future, and is also prepared to make a major financial investment in ensuring that our company returns to full health. We are optimistic that, with HERO’s investment, not only have we placed an important building block for our financial reorganisation, but we have also found a valuable partner for the future structuring of our operating business,” is how Hans-Peter Barth, CEO of MIFA, expressed his pleasure at the agreement that has been reached.
Investment agreement with Indian bike manufacturer HERO concluded, equity investment pursuant to capital increases from authorised capital
- Investment agreement with OPM Global B.V., a subsidiary of Hero Cycles Ltd., about an equity capital investment in the amount of EUR 15 million concluded
- FERI EuroRating Services AG reduced issue rating of corporate bond
- Annual General Meeting expected for third quarter of 2014
Sangerhausen, 19 May 2014 – MIFA Mitteldeutsche Fahrradwerke AG (“MIFA”, German security identification number: A0B95Y, ISIN: DE000A0B95Y8) announces that the company OPM Global B.V., a subsidiary of Hero Cycles Ltd. (“HERO”), has entered into a general commitment today as part of an investment agreement to underwrite capital increases in cash in the amount of EUR 15 million from MIFA’s existing authorised capital and thus invest up to EUR 15 million of equity into MIFA. The cash capital increases shall comprise a 10% capital increase with subscription rights being excluded and a subsequent rights issue with a total number of 4.9 million new shares to be issued. OPM Global B.V. has undertaken to subscribe all such shares which together with additional existing shares to be transferred from certain existing shareholders would result in an overall participation of the investor of up to 47 %. The investment commitment by OPM Global B.V. entails significant financial contributions of MIFA’s financing partners and is subject to various conditions precedent, especially to the condition of a haircut in the amount of EUR 15-20 million of the bondholders as well as an exemption from the German Financial Supervisory Authority (BaFin) from the obligation to make a public takeover offer under the The German Securities Acquisition and Takeover Act.
FERI EuroRating Services AG, which MIFA mandated to prepare an issue rating for the corporate bond that it issued in August 2013, notified MIFA that it has reduced the “B-” issue rating to “CC”.
In addition, MIFA announces that this year’s Annual General Meeting of the company is expected to be postponed until the third quarter of 2014 due to the delayed publication of the annual financial statements.