17. March 2021

DUKAP offers its opinion on ESG ratings

Christian Lutz, Partner at DUKAP, in FINANCE magazine.
Sustainability ratings are becoming more and more important.
In response, Europe’s financial regulator, the European Securities and Markets Authority (ESMA), has called for stricter monitoring of ESG rating agencies.
To find out more, you could read the highly informative article by Antonia Kögler in the latest issue of FINANCE magazine. And, if you are a financial decision-maker dealing with the following questions:
• What should you look for when faced with a choice of ESG rating agencies?
• Which agency provides which range of services?
• Which rating procedures (including ESG corporate rating, ESG impact rating, second party opinions (SPO), etc.) are recommended for which financing situation?
please get in touch with us. As part of our ESG rating advisory strategy, we can help you identify the best solutions to the challenges of sustainable finance.

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5. March 2021

LIBOR is ending in 2021

On December 31, 2021, the reference interest rate LIBOR for the euro, the pound sterling, the Swiss franc, the U.S. dollar and the Japanese yen will become obsolete.
LIBOR is still the most common benchmark interest rate in most loan agreements. It is estimated that over $200 trillion of credit around the world will be impacted by the end of LIBOR.
Any contract that directly references LIBOR will need to be modified by June 2023. If you are affected, we would be delighted to advise you.

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1. March 2021

DUKAP successfully arranges additional financing during Covid-19 pandemic

DUKAP provided comprehensive advice to the shareholders of MAS Group on finding a new banking provider, restructuring securities and expanding the company’s existing credit lines. In addition, new loans were obtained to refinance MAS Group’s major digitalisation projects. The new financing enabled MAS Group to upgrade its digital technologies during the pandemic year of 2020. MAS Group is an owner-managed group of companies based in the Greater Stuttgart region that specialises in the development, design and production of cutting tools.

DUKAP provided analytical services and comprehensive advice in the development of an optimal financing scheme for a longstanding retail park (28,000 sqm GFA) in Hungary. The park’s owner, a prominent Austrian real estate group, decided to sell the park to an institutional fund company. The Wegscheider Group is a family business, established in 1862 and built through six generations. Headquartered in Wörgl/Tyrol, the group focuses on the acquisition and development of commercial and retail properties in Austria, Germany, Italy and Hungary.

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1. DUKAP Sustainable Finance Web conference in February 2021

How can long-term corporate strategies and ESG investments be financed? How will political sustainability goals shape the regulatory landscape for capital providers and companies? What does a company’s management need to know about ESG finance issues? What impact will ESG compliance have on new financing? Should existing financing be restructured? These and other questions were discussed by experts and 100 participants at the 1st DUKAP Sustainable Finance Web Conference via livestream.

Keynote speaker Professor Tobias Popovic, Head of the Centre for Sustainable Business and Management (ZNWM) at the University of Applied Sciences in Stuttgart defined the horizon of expectations. One of the Landesbank Baden-Württemberg’s legal advisors provided detailed insights into the changed legal framework for future financing agreements, as well as explaining ESG rating requirements and potential funding pitfalls. Thought leaders and leading experts from BNP Paribas, Deutsche Bank, DZ Bank and UniCredit vividly presented their institutions’ ESG strategies and their new products.

From the lively exchange with the audience, it was clear that there is a great thirst for knowledge and information on sustainable financing issues. The questions of whether a CFO should expect adjustments to existing loan agreements, which sustainable finance strategies the participating banks are pursuing in pricing and lending decisions, and what factors play a role in a company receiving its first ESG rating, all met with particular interest. In conclusion, DUKAP provided the participating financial decision-makers with specific recommendations for action.

All of the conference’s speakers appeared free of charge, which enabled DUKAP to pass on a significant sum from the participants’ fees to the Yunus Social Business (YSB) fundraising project, which provides loans to micro-entrepreneurs in developing regions of the world.

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6. October 2020

Automotive supplier secures new €120 million syndicated loan during the coronavirus crisis

As a high-potential and well-established automotive supplier, it is possible to arrange conventional long-term financing with banks even in the current environment.

In August, Eissmann Automotive Deutschland, a medium-sized enterprise based in Baden-Württemberg, Germany, concluded an agreement to secure €120 million of new loans to finance the growth of its international group of companies. With the new, multi-option syndicated loan facility, the company will be able to repay its existing bank liabilities and have the financial resources it needs for further investments. The loan provides a firm financial foundation for the continuous expansion of the company’s global operations and for the further development of innovative interior concepts for the e-mobility sector.

DUKAP assisted the company in preparing its loan applications, designed the financing structure, developed the term sheet, conducted the contract negotiations together with Eissmann, participated in the syndication talks with the banks, and supported the company throughout the entire process to the successful closing.

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2. September 2020

Financing with the KfW Coronavirus Special Loan Program

DUKAP has assisted a highly integrated group of companies in the recycling sector in securing more than €50 million of additional financing. DUKAP provided comprehensive advice to support the company in financing its investment program and increasing its working capital during the coronavirus pandemic.

DUKAP secured funds from a number of savings banks and also arranged entrepreneurial loans for established companies from the state-owned KfW Bank. With the KfW financing in place, the group was able to compensate for a corona-related dip in orders by increasing its working capital and investing in interim storage solutions that will make it possible to sell its products once the market and prices pick up again.

DUKAP had previously supported the same company in securing loans to facilitate ambitious investment projects, such as the acquisition of real estate and investments in plant and machinery, to kick-start the next phase of the fast-growing group’s development. In the process, mezzanine and other loan funds were restructured, a managing partner’s shareholdings were increased and additional investments were made.

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30. March 2020

CORONA news: What to do in the crisis

First of all, the most important thing in any serious crisis is not to waste time trying to find the perfect solution, but to quickly and decisively implement a solution that makes 80% sense. Based on our extensive experience, more companies became insolvent in pervious crises because they reacted too late, not because they reacted the wrong way. The relevant timescale is “days and weeks,” not “weeks and months”. Every day costs money, money that will be missing at the end of the crisis when you are looking to get your company back on track. This sounds trivial, but it is not. Too many managers are simply too afraid of making mistakes. In acute crises, however, the desire to avoid mistakes has to take a backseat because no one can know a priori what is “right” or “wrong.” What companies really needed is a credible manager who can win trust by implementing strategies consistently and acting with integrity.

A. Secure liquidity in the short and medium term (absolute priority):

Draw up short-term liquidity plans every single week and update them continuously (the Pareto principle also applies here, because speed is important). This involves:
• listing secure income and unavoidable expenses for the next 6 (or even better, 13) weeks;
• deferring all other expenses (until their significance is weighted);
• examining how (even seemingly unavoidable) costs can be reduced without jeopardising emergency operations; e.g. through furloughs and part-time work, tax deferrals; and
• suspending all investment decisions immediately, ready to re-evaluate them at a later date later based on your plans for the next 12 months or so.

Develop month-by-month liquidity plans for the next 6–9 months, based on realistic assumptions, as explained below under “B”.

Prepare documents to apply for liquidity assistance loans and/or bank guarantees (KfW, state development agencies, etc.) using your crisis plans as a basis. All funding programmes provide grants and loans via banks – and banks need more time in a crisis to approve applications and disburse funds because they are overrun!

Contact your banking providers and, if necessary, credit insurers, as soon as you can. Unfortunately, we have observed that most banks are only approving loans to existing business customers. This is important to note because the emergency funding programmes all require banks to assume (some) of the credit risk.

B. Operative measures:

Determine which activities are really indispensable to keep the company afloat in the short term and to implement your crisis measures (e.g. management, some accounting and IT employees, some sales personnel to maintain contact with customers, caretakers/cleaners, etc). In view of the risks of contagion, if possible, set up two separate teams for each of these functions and ensure that they do not meet face-to-face but take turns in the office.

Determine which indispensable activities can only be performed in the office and which can be done from home.

Distribute the (presumably limited) equipment needed for employees to work from home.
Send employees who are not needed on compulsory leave until the furlough payments start to arrive. Do not let them sit around at home pretending to working, because you may well need your employees later in the year, and wouldn’t want them all to take vacation then.

Ensure that your company’s management and decision-making bodies agree on a realistic working hypothesis and develop a new plan based on their input. If you are an industrial company, you should have a clear idea of when your sales channels will open up again and when your suppliers will be able to deliver. If you are a service provider, you will need to consider how your services harmonise or conflict with the pandemic response, because some services may not be required again until adequate supplies of effective medicines and vaccines are available. You should also make sure that your working hypotheses are clear and realistic for third parties – such as funding agencies.

Put together a project team with one representative from each key business area and ensure they provide you with regular updates and who maintain communication with the other employees. If necessary, involve external advisors (tax advisors, labour lawyers, etc.).

Work with your project team to identify the measures that will be required to implement your working hypotheses.

Draw up a timetable and update it at least once a week.

Your project team, however, should not be a classic working group; management must lead and give instructions.

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17. September 2019

DUKAP arranges structured financing for Donges Group, a member of the Mutares Group

Donges Group is a leading European full-service provider for bridge and industrial steel constructions as well as roof and facade systems and timber, particularly in Western and Northern Europe.

DUKAP provided advice on financing and secured funding for Donges Steeltech independent of the group. In close collaboration with the owner and management, DUKAP organised structured financing to enable Donges Group to strengthen its market position and achieve further significant growth.

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11. September 2019

DUKAP rearranges financing for Balcke-Dürr after company restructuring

Balcke-Dürr is one of the world’s leading manufacturers of components for increasing energy efficiency and reducing the environmental impact of the chemical and power plant industries with more than 130 years of experience. The company is a member of the Mutares Group.

DUKAP reviewed and rearranged the company’s existing financing and securities structures a part of the company’s comprehensive restructuring process. DUKAP helped the company to expand and restructure its credit and guarantee facilities with existing and new financing providers, and to implement an optimised collateral trust agreement.

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7. July 2019

International syndicated loan for dynamic recycling company

Operating within the recycling sector, this group of companies generates revenues of around €160 million and has plants in Germany, Belgium, Spain and the United States, where it processes a variety of plastic waste, from easy to recycle industrial waste to more challenging domestic recyclables. The recycled materials are used to manufacture a wide range of products, including plastic pallets, industrial containers and components for construction sites and gardens. The group not only manufactures and sells, it also develops recycling equipment and holds the corresponding patents.

DUKAP advised this dynamic group of companies on preparing and implementing the fundamental reorganisation and expansion of its debt structure. The central element of the new group financing is a syndicated loan of €75 million, which was arranged by DUKAP and generated a strong response from domestic and foreign banks.

The new long-term financing is designed to enable the group to implement its ambitious growth plans and provide financial security for its subsidiaries. In addition to the €75 million syndicated loan for cash and guarantee drawdowns, which can be disbursed in a range of currencies, the new facilities also include options for off-balance sheet financing. In the course of the restructuring, the costs of the financing were significantly reduced, the workload of the company’s treasury department was streamlined and previously agreed loan covenant restrictions were lifted.

DUKAP supported the group in identifying needs, developing the financing structure, approaching suitable international financing providers, evaluating offers and negotiating loans until successful completion.

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19. May 2019

First syndicated loan for southern German tool manufacturer

Leading global manufacturer of special tools in southern Germany with sales of €250 million concludes first syndicated loan of €85 million.

DUKAP provided comprehensive advice and support to a leading manufacturer of special tools from southern Germany to prepare and implement a programme to fundamentally reorganise and expand its debt structure. In 2018, the group of companies generated sales revenues of more than €250 million in more than 30 countries.

The group’s new long-term financing will allow it to implement its ambitious growth plans and provide financial security for its subsidiaries on five continents. In addition to the €85 million syndicated loan for cash and guarantee drawdowns, which can be disbursed in a range of currencies, the new facilities also include options for off-balance sheet financing. In the course of the restructuring, the costs of the financing were significantly reduced, the workload of the company’s treasury department was streamlined and previously agreed loan covenant restrictions were lifted.

DUKAP supported the group in identifying needs, developing the financing structure, approaching suitable international financing providers, evaluating offers and negotiating loans until successful completion.

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15. December 2014

SUMMIT GERMANY refinances two portfolios

DG Hyp and HSH Nordbank have refinanced two Summit Germany portfolios. The seven-year loans total €240mn at 2.35% interest and LTV ratios of 70% and 65%. DUKAP  structured the transaction and procured funding for the Summit group.

The loans were initially to run until 2017. The larger portfolio (“Clara,” €152mn) holds 30 properties from Summit subsidiary and former Goldman Sachs company Deutsche Real Estate AG. The smaller portfolio comprises 54 properties. In total, the office, retail, and logistics properties have an area of 580,000 sqm.

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7. December 2014

DUKAP successfully completes restructuring of several French companies

DUKAP has helped a larger Southern-German company to stop loss making for its seven production subsidiaries in France after several years and generate positive cash flows again.

DUKAP acted for nine months as interim manager for the French subsidiaries during this restructuring process and implemented the respective restructuring measures.

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15. November 2014

DUKAP acts as refinance advisor for TecDAX company

November 2014 – A TecDAX company has successfully secured new financing after a pool-funding situation. The structure of the financing has been significantly improved and stabilized with this. DUKAP acted as advisor for the board of directors regarding the new financing concept, seeking investors and negotiating with potential lenders.

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15. December 2012

GSG – ORCO refinancing process finalized

Download the official press release by Orco Property Group

December 2012 – Gewerbesiedlungs-Gesellschaft mbH (GSG) has paid off the totality of the outstanding loan from The Royal Bank of Scotland plc. (RBS) amounting to EUR 281.9 million. This was made possible by the drawing of a new loan with a total volume of EUR 269.6 million with five German banks: DG HYP, consortium lead, Coreal Credit Bank AG, Düsseldorfer Hypothekenbank AG, HSH Nordbank AG and Investitionsbank Berlin. The new loan has a term of five years and an interest service lower by 2 percentage points than the initial RBS loan. The agreement stipulates a mortgage collateralisation of the loan, a minimum capex spending commitment as well as quarterly amortization, which will reduce the company`s LTV based on the current company valuation to approx. 55% in 2017. In the context of the preparation and realisation of the refinancing, GSG has been advised in terms of financing issues by DUKON Deutsche Unternehmenskapital (predecessor company of DUKAP) and Rothschild, in terms of legal issues by Gehrke Zumbroich & Partner and Salans LLP.

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