Tag Archives: Praktiker ag Anleihe

Praktiker update – Loss 2011 and result of first vote of “voluntary bond haircut”

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Praktiker, the troubled DIY chain has issued a preliminary earnings release yesterday evening.

They managed to book a total loss of 554.7 mn EUR, which translates into -9.56 EUR per share. So most of the 2010 book value of around 14 EUR has now dissapeared within a year.

Very strange (at least for me) was the following passsage:

– So führte die erstmalige Anwendung einer neuen Bewertungssystematik für Warenvorräte zu einer Wertberichtigung des Vorratsvermögens (69,8 Millionen Euro).

So inventory was written down by 70 mn EUR due to a new “method”. This is almost -10% of the 800 mn inventory they showed in Q3 2011. I would be really curious what kind of “method” they used before.

Voluntary Bond haircut

For some reason, I only found the results of the first bondholder praktiker 27.03.2012“>vote through the Luxemburg exchange and not through Praktikers homepage.

So within the process described in a previous post, less than the required 50% have voted in the first round.

However, in the second round only 25% of the bondholders have to vote. So let’s wait and see if those 25% are already “in the bag” and if in the second round more bondholders participate.

It would be really interesting to know, who voted in the first round but as a non-participant I don’t have access too this file on Praktiker’s homepage.

Praktiker AG bond – doing the homework on German law and further thoughts

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“Homework”

My last post about Praktiker contained some mistakes especially about he required votes for any change in the provisions of the bonds. I have to admit that I didn’t read the paragraphs before. So let’s do the homework and look at the “Schuldverschreibungsgesetz – SchVG“.

One of the mistakes I made was the following:

Technically, they need at last the mojority of 50% of the bondholders in the first round. If this doesn’t work, in the second round, the majority of a minimum 25% of bondholders (effectively 12.5% plus one bond) could then agree to the changes on behalf of all bond holders.

The German law says however:

Beschlüsse, durch welche der wesentliche Inhalt der Anleihebedingungen geändert wird, insbesondere in den Fällen des Absatzes 3 Nummer 1 bis 9, bedürfen zu ihrer Wirksamkeit einer Mehrheit von mindestens 75 Prozent der teilnehmenden Stimmrechte (qualifizierte Mehrheit). Die Anleihebedingungen können für einzelne oder alle Maßnahmen eine höhere Mehrheit vorschreiben.

So this means the following: In order for the requested changes to become effective, 50% of the Bondholders have to participate in the first round and 75% of the particpants have to approve the proposal.

The same applies to a second round, if 50% particpation is not reached in the first instance, again, 75% of the partcipants have to agree to the proposal. So in an absolute worst case 18.75% of the bondholder could make the requested “hair cut” effective.

Further thoughts:

I still struggle making sense of the sequence of the events. However I came up with one (maybe unlikely) scenario:

I think no one is really interested in putting money into Praktiker as a “minority” investor. However, due to the CoC “poison pill”, a purchase of a majority would be very expensive. So in theory, a prospective buyer wants to buy as many bonds as at a discount as possible in ordert to lower his total purchase price.

The “offer” of cutting the coupon could therefore be a “tool” to get as many bonds at a discount to make a majority acquisition (i.e. through a highly dilutive capital increase) without paying out 250 mn EUR to the bondholders. For someone potentially owning both, a majority position in the shares and a large block of bonds, the cut in the coupon could be value enhancing.

It doesn’t change my approach (Don’t invest if you don’t know the motives of the players involved), but it makes good entertainment and hopefully a good learning experience.