Cologne/Essen, 8 June 2020 – The IR.on AG consultant team has provided SANHA GmbH & Co. KG with advice and communications support for the preparation and implementation of the noteholders’ meeting to vote on the adjustments to the conditions of the issue developed by the Common Representative.
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In the context of the coronavirus crisis, many companies are faced with uncertainties regarding the impact on their operating activities and the protection of liquidity. SANHA GmbH & Co. KG, a leading manufacturer of pipe systems and fittings for the plumbing, heating and cooling (PHC) industry, has shown a positive performance over the past years and in the first quarter of 2020, but has been severely affected by the economic impact of the coronavirus pandemic since April 2020.
To secure the business operations and liquidity in this crisis, which was not caused by any fault of the company, the Common Representative, One Square Advisory Services GmbH, developed a concept to adjust the conditions of the SANHA 2013/2023 bond, which preserves SANHA’s liquidity by reducing the interest rate for the corporate bond in the coming years, postpones the maturity of the bond by three years to 2026 and finally guarantees a partial recovery of lost interest by means of a repayment amount of 105% at maturity. In addition, the covenants and the negative pledge are to be adjusted to give the company greater financial flexibility until 2026.
Communication with the 2013/2023 noteholders, the public and the capital market posed diverse challenges. First of all, it was necessary to explain in a transparent manner what consequences an unprecedented crisis such as the coronavirus pandemic has for the company’s business operations. For this purpose, SANHA published a “Coronavirus FAQ” on its website at an early stage with support from IR.on AG.
The second step was to make the noteholders understand and accept the adjustment concept. Not least against the background of the first 5-year prolongation of the bond to 2023 in 2017, it was important to emphasize that it was not the company’s fault that the conditions of the issue had to be adjusted again. To this end, the management and the Common Representative held several interviews with bond media to explain the concept. In addition, SANHA’s management and IR.on consultants were available as personal contacts to answer noteholders’ questions.
Another challenge was to achieve the necessary 25% quorum for the second noteholders’ meeting. In this respect, IR.on supported the company in identifying and contacting investors to ensure the participation of as many noteholders as possible. This was made more difficult by the fact that, according to the German Bond Act (“Schuldverschreibungsgesetz”), the meeting had to be held as a physical event, but that the gathering of larger groups of people was prohibited or possible only on strict conditions because of the coronavirus pandemic. Noteholders were therefore encouraged to cast their votes without personal participation by granting power of attorney to the proxies. In order to meet the information needs of the noteholders, a webcast was held before the actual meeting to explain the plans and to give the opportunity to ask questions to the management and the Common Representative.
With a transparent dialog and rapid implementation, SANHA won the trust of the noteholders and the second noteholders’ meeting approved a modified adjustment concept that gives SANHA the necessary leeway to successfully overcome the coronavirus crisis.
Find out more about investor relations in times of crisis and read our “Focal Point” on Crisis Communication in the Capital Market – A Model for Trust-building Interaction with Private Investors or subscribe to our IR.on Newsletter.
