GELSENKIRCHEN, Germany (June 30, 2010)—Hose company Masterflex A.G. and its financing partners have agreed to restructure the company's financing over the long term, subject to approval by its board and bank syndicates.
The main components of the arrangement are:
— Significant reduction of lenders by seven banks, to a future total of six banks;
— Repayment of the seven departing banks with a current claim volume of about $30.6 million through the end of 2010, involving a waiver of about $12.2 million in claims which will be recognized under profit and loss.
— Provision of structured, long-term (five-year) external financing for Masterflex by the remaining core banks in exchange for guarantees concerning the following certain conditions.
Masterflex said it will pass a “major milestone in terms of restructuring its operations,” by reporting the Advanced Material Design segment (surface technology) as a discontinued business unit effective June 30.
The company expects to dispose of this unit before the end of this year. This will entail a deconsolidation expense of about $6.1 million and will affect both Masterflex's consolidated profit and loss and its consolidated equity.
Disposal of this loss-making unit is a major step toward focusing on its successful core business in High-Tech Hose Systems made largely of polyurethane, the company.
Masterflex said several key investors have signed letters of intent saying that they are prepared to take equity stakes in Masterflex when the financing arrangement is implemented.