As last announced in the Company release no. 21, 30 May 2011, Tower Group A/S is in ongoing negotiations with the Company's banks regarding a revision of the stand-still agreements entered into as part of the restructuring process in the spring 2010
The Company’s management has previously evaluated that a successful conclusion of the planned rights-issue, and the Company in general, are dependent on the conclusion of long-term agreements with the Company’s banks regarding a revision of the stand-still agreements and/or loan agreements.
In order to give the Company time to negotiate such agreements with the Company’s banks, The Company’s management therefore decided to postpone the planned rights issue until the beginning of the 3rd quarter of 2011.
To secure the company's liquidity situation until the rights-issue can be concluded, the Company has negotiated short-term agreements with the senior banks regarding a delay of amortisation payments and a suspension of the consequences of certain breaches of covenants.
However, as announced in Company release no. 9, 30 March 2011, the latest of these agreements between the Company and its banks expires as per 30 June 2011.
The Company has not yet succeeded in reaching long-term agreements with its banks regarding a revision of the stand-still and loan agreements. This means that some of the German subsidiaries of the Company, representing approximately 80% of the assets, are in default of their loan obligations until such a time as they negotiate an agreement with the banks. The following subsidiaries are therefore insolvent (unable to pay their debt) as of 30 June 2011:
Tower 1 Immobilien zweite GmbH
Tower 1 Immobilien dritte GmbH
Tower 1 Immobilien vierte GmbH
Tower 1 Immobilien fünfte GmbH
Tower 1 Immobilien sechste GmbH
Tower 1 Immobilien siebente GmbH
Tower 1 Immobilien achte GmbH
Tower 1 Immobilien neunte GmbH
Eranus Real Estate Investment GmbH
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, within 3 weeks of the date of insolvency. When filing for insolvency an administrator, who will replace the management, will be appointed. The administrator will then have 3 months to create a reconstruction plan in coordination with the creditors.
The management has, however, received indications from the banks that an agreement is still possible within the above mentioned 3 weeks period.
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.