With Company release no. 27, July 21 2011, the Company informed that some German subsidiaries of the Company had to file for insolvency as they were unable to make some installment payments on some of their loans and that the restructuring negotiations with some of the Senior lenders had failed.
The management of the relevant subsidiaries is, as a matter of German law, required to file for insolvency without undue delay, that is, at the latest three weeks, from the date of insolvency (unable to pay payments that are due). The three week period can be used, to come to a restructuring agreement, as long as there are indications from the creditors that an agreement on a restructuring can be reached.
Regarding the subsidiaries Tower 1 Immobilien zweite GmbH and Tower 1 Immobilien vierte GmbH, the management, has come to the conclusion that the negotiations with Berlin Hyp will not lead to a restructuring agreement.. Furthermore, the Berlin Hyp has canceled the standstill agreement that was in place and terminated the loan and swap agreements. As a result, the management of these two subsidiaries has filed for insolvency. The two subsidiaries represent 30% of the Tower Group portfolio.
At this point in time,52% of the Tower Group portfolio is now under insolvency proceedings.
The Court will shortly name a preliminary insolvency administrator who will take over the management of the relevant companies. At this point in time, we expect that for the immediate future that, the insolvency administrator will continue to contract property management services with Tower Management GmbH.
The Company remains in ongoing negotiations with its other creditors on restructuring the remainder of the portfolio. These other portfolios remain under standstill agreements resulting in a deferral of the insolvency as announced in release no 26/2011.
At this point in time, management is not in a position to provide any further guidance on the impact of this new situation to the expectations of the year end-result of the Company.
Kind regards
Tower Group A/S
Martin Coté
CEO
Questions regarding this release can be directed to Martin Coté, CEO, on tel.: +420 725 716 755.
