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Bondholder InformationProvided by
Rieter Holding AG, Winterthur, Switzerland
regarding 4.5% Bonds 2010 – 2015 of CHF 250,000,000
April 20, 2011
2 Bondholder Information
According to clause 7 section 1 para. f) and clause 7 section 5 of the terms of the outstanding CHF 250,000,000, 4.5% bond due 2015 (the «Bonds»), the bondholder representative (Credit Suisse AG) has the right (but no obligation) to either declare the Bonds due and payable or to call a bondholders’ meeting (the «Bondholders’ Meeting») and ask bondholders to vote on declaring the Bonds due and payable, in case Rieter changes its legal and/or commercial structure and such change
is deemed by the bondholder representative (Credit Suisse AG) to have a material effect on Rieter’s capacity to meet its obligations in connection with the Bonds.
In the light of the approved Separation and after consultation with Rieter, Credit Suisse AG has called a Bondholder’s Meeting in order to allow the bondholders to decide whether the Bonds shall be declared due and payable.
2. REASON FOR CONVENING A BONDHOLDERS’ MEETING
If the bondholders decide not to declare the Bonds due and payable at the Bondholders’ Meeting («No» to the default question), the Bonds continue until April 30, 2015 and the bondholders will continue to receive annual interest payments of 4.5% per April 30.
If the bondholders decide to declare the Bonds due and payable at the Bondholders’ Meeting («Yes» to the default
3. IMPLICATIONS OF OUTCOME OF BONDHOLDERS’ MEETING
1. BACKGROUND
At the Annual General Meeting of April 13, 2011, the shareholders of Rieter Holding AG («Rieter») approved the separation of the Automotive Systems Division from Rieter (the «Separation»). The Automotive Systems Division will be separately listed and traded as Autoneum on the SIX Swiss Exchange on or around May 13, 2011. Rieter shares will remain listed on the SIX Swiss Exchange.
The Board of Directors of Rieter is convinced that operating the Textile Systems and the Automotive Systems divisions as legally and financially independent businesses will reap a number of considerable benefits for both businesses and their respective customers and employees, in particular it
will enable the businesses to better position themselves and sharpen their individual investment cases. An important result of being independent will be the higher strategic and operational flexibility of each entity. This will enable Rieter as well as Autoneum to capitalize on further development potential and growth opportunities, e.g. through partnerships or co-operations. The separation is a consequence of Rieter’s long-running development goal to establish the financial independence of both businesses. Already today both divisions are operated as separate businesses with their own management teams and organizations. Making them formally independent is therefore a logical step.
question), the Bonds will be repaid immediately at par together with accrued interest. Such repayment at par might differ from the market price of the Bonds.
The continuation of the Bonds would allow Rieter to maintain greater strategic financial flexibility.
SIX listed
d Automotive Systems
(Autoneum Holding AG)
Rieter Group structure pre proposed Separation
Textile Systems
Sales split by division 2010
Proposed Separation: Distribution of Autoneum Shares
to Rieter Holding shareholders
Rieter Holding AG Textile Systems Automotive Systems
100%
66%
34%
Shareholders
Pre proposed Separation
SIX listed
Structure post proposed Separation
Rieter (Textile Business)
Autoneum (Automotive Business)
Rieter Holding AG
100%
Autoneum Holding AG
100%
s s
SIX listed
Shareholders
Post proposed Separation
3Bondholder Information
4. OVERVIEW OF RIETER AFTER THE SEPARATION OF AUTONEUM
4.1. Business description and key investment highlights
Rieter (Rieter Group post Separation) is a leading supplier of short-staple fiber spinning machinery and components with the broadest global product offering.
Global supplier… … of spinning machinery and components
Rieter is the world’s only supplier offering both solutions for spinning preparation as well as all four short-staple fiber spinning technologies established in the marketplace.
Rieter has systematically expanded its traditional machine business with technology components and service offerings for short-staple spinning mills and is now one of the world’s largest suppliers in the components segment. This business is less exposed than the machinery business to the market cycles specific to the industry.
Rieter is currently among the leaders on the world market for all its key products in the machinery and components segments. Rieter is a strong brand with a long tradition. Rieter globalized its textile machinery business at an early stage and thus has a sound market position worldwide. In particular, Rieter has in recent years expanded its presence by establishing manufacturing facilities in the large and growing markets of China and India and is developing innovative specific products for such markets.
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4.2. Rieter Group and Rieter standalone financial information Key figures: Income Statement, Capex and Employees
Rieter was in 2010 able to approximately triple its order intake to CHF 1,453.1 million compared to 2009. Sales increased by 66% compared to 2009 and EBIT improved by CHF 133.4 million to CHF 62.0 million in 2010.
1) Adjusted to reflect effects post separation, non-audited, including CHF 10.0 million headquarter costs on EBIT level and CHF 9.8 million on EBITDA level, without divested businesses2) Based on Corporate Output
Million CHF Rieter Group31.12.2010
Rieter31.12.2010
post separation, non-audited1)
Rieter31.12.2009
post separation, non-audited1)
Order Intake 3,170.0 1,453.1 482.5
Sales 2,585.8 864.6 522.3
Corporate Output 2,525.5 906.4 481.8
EBITDA 222.8 101.9 –27.1
Margin2) (%) 8.8 11.2 –5.6
Depreciation and Amortization 124.8 39.9 44.3
EBIT 98.0 62.0 –71.4
Margin2) (%) 3.9 6.8 –14.8
Capex 98.2 25.8 5.5
Employees (excl. temporaries) 12,804 4,388 4,061
Key figures: Balance Sheet
Cash and cash equivalents of CHF 375.6 million stand against interest bearing liabilities of CHF 281.6 million. These consist mainly of the CHF 250.0 million Bonds referred to in this information brochure.
3) Rieter balance sheet as at 31 December 2010 adjusted to reflect effects post separation
Million CHF Rieter Group31.12.2010
Rieter31.12.2010
post separation, non-audited3)
Cash and cash equivalents 359.0 375.6
Total assets 1,969.1 1,119.3
Interest bearing liabilities 362.5 281.6
Other liabilities 979.0 513.2
Equity incl. minority interests 627.6 324.5
Total liabilities and equity 1,969.1 1,119.3
Net liquidity –3.5 94.0
Equity ratio (in %) 31.9 29.0
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4.3. Outlook As a leading supplier to the textile machinery, Rieter’s Textile Systems Division participated successfully in the market recovery last year. Order intake and sales rose markedly throughout 2010. Rieter’s Textile Systems Division attained a positive operating profit again.
Further development of the respective markets mainly depends on consumer sentiment in Europe and North America, and on economic growth in the major Asian markets. Factors that can additionally influence business developments also include exchange rate effects and raw-material prices – not to speak of disasters as for example in Japan in March 2011.
Thanks to the order backlog at the beginning of year, and good ongoing demand for textile machinery and components, Rieter expects a substantial sales increase for 2011. Rieter expects a further improvement of operating margin compared with 2010 overall, primarily due to higher volumes both in the textile machinery and components businesses. Rieter plans additional investments to accelerate production plant expansion in Asia and thereby further improve its market positioning in China and India.
Over the cycle, Rieter aims to grow sales by 5%, achieve EBIT ratios of >9% (in peak years >12%), net result ratios of >6% (in peak years >8%). Return on net assets is aimed at >14% in peak years. Capex over the cycle are aimed at 4-5% of corporate output.
reliance on such forward-looking statements. Further, it should be noted that the market data as well as past trends and performances described in this information brochure are no guarantee for the future development, performance and value of Rieter.
You are recommended to read this entire information brochure. You should not assume that the information contained in this information brochure is accurate as of any date other than the date on the cover. Changes to the information contained in this information brochure may occur after that date, and Rieter undertakes no obligation to update the information, except in the normal course of its public disclosure obligations and practices.
THIS INFORMATION BROCHURE DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY. THE DISTRIBUTION OF THIS INFORMATION BROCHURE MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS. PERSONS IN POSSESSION OF THIS INFORMATION BROCHURE ARE REQUIRED TO INFORM THEMSELVES ABOUT AND OBSERVE SUCH RESTRICTIONS. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF ANY SUCH JURISDICTIONS. RIETER DOES NOT ACCEPT ANY RESPONSIBILITY FOR ANY VIOLATION BY ANY PERSON OF ANY SUCH RESTRICTIONS.
THE GERMAN VERSION OF THIS INFORMATION BROCHURE SHALL PREVAIL IN THE EVENT OF ANY CONFLICT BETWEEN THE GERMAN VERSION AND ANY TRANSLATED VERSION.
5. DISCLAIMER
This information brochure has been prepared exclusively for the holders of the CHF 250,000,000 4.5% Bonds due April 30, 2015 of Rieter in connection with the Bondholders’ Meeting to be held on May 10, 2011. It does not constitute an invitation or an offer to purchase, sell, trade or subscribe for any securities of Rieter or Autoneum. This information brochure is not an offering prospectus within the meaning of Article 652a or Article 1156 of the Swiss Code of Obligations, nor is it a listing prospectus as defined in the listing rules of the SIX Swiss Exchange Ltd or a prospectus under any other legislative or regulatory provisions of any jurisdiction.
The notice for the Bondholders’ Meeting, which sets forth the agenda information regarding the participation in the Bondholders’ Meeting, is being circulated together with this information brochure.
If you are in any doubt as to the action you should take, you should seek your own financial advice from your custodian, investment advisor, legal or tax advisor.
This information brochure contains forward-looking statements that express intentions and expectations relating to future financial, operational and other developments and results. Such statements and the underlying assumptions are subject to a variety of risks, uncertainties and other factors, which could mean that the actual developments may differ significantly therefrom. In view of these uncertainties, readers of this information brochure are cautioned not to place undue
CONTACT DETAILS Further information on Rieter can be found on www.rieter.com.
Rieter Holding AGSchlosstalstrasse 43CH-8406 WinterthurT +41 52 208 71 71F +41 52 208 70 60