Crisis communication on the restructuring exercise with debtor-in-possession status

IR.on advised the Management Board on the communication in the insolvency proceedings with debtor-in-possession status of KTG Energie AG

Cologne, 24 February 2017 Based on a resolution dated 10 February 2017, the Neuruppin local court approved the insolvency plan. This marks an important step on the way to restructuring the energy subsidiary of the former KTG Group. The restructuring concept on which the insolvency plan is based allows the company to continue as a going concern and to be deleveraged. It provides for the creditors to receive proportional dividends and to share in the Group’s future profits by way of a debtor warrant scheme.

The company’s crisis is the result of the insolvency of the parent company, KTG Agrar, in July 2016. Because of its financial integration with the parent company, the profitable listed subsidiary KTG Energie also had to file for insolvency with debtor-in-possession status in September 2016. The advantage of the debtor-in-possession status is that the company stands a change of being restructured without losing its managerial and financial sovereignty to an insolvency administrator.

The main challenge for the crisis communication and the IR activities was to explain the key points of the insolvency plan and its advantages. The aim was to make it difficult for opponents to attack the plan and to win the required majority for the planned solution through an open dialogue and transparent communication. With regard to the bondholders, who represent the largest creditor group, it was important to make it clear that the company is open to alternative scenarios for satisfying the creditors. In the end, however, no binding solution was proposed.

KTG Energie was IR.on’s fourth successful mandate for restructuring-related crisis communication in the past 15 months (after Ekotechnika GmbH, Ekosem-Agrar GmbH and DF Deutsche Forfait AG).

The main task for IR.on was to establish a clear communication structure, to develop messages and wordings to quickly answer the many questions and to manage the media relations while complying with the publication duties as a listed company.

In the end, the insolvency plan was approved by four of five creditor groups. The consent of the bondholders, most of whom opposed the plan, was substituted by the court. A previous M&A process ended without a binding bid being received, which meant that there was no realistic alternative scenario except for a break-up of the company.

Fourth restructuring mandate in the past 15 months

KTG Energie was IR.on’s fourth successful mandate for restructuring-related crisis communication in the past 15 months (after Ekotechnika GmbH, Ekosem-Agrar GmbH and DF Deutsche Forfait AG). The consultant team was composed of Management Board member Fabian Kirchmann as well as Anna-Lena Mayer and Thomas Feldmann.