Sale of Cimos successfully concludes, TCH is the new owner of Cimos
Koper, 18 May 2017 - Today we marked the completion of the process of the sale of the Slovenian state-owned car parts maker Cimos to TCH, part of Italy's investment firm Palladio Holding Group. Closing was successfully concluded upon fulfilment of all requirements stated in the Sale and Purchase Agreement, which the sellers and the buyer signed on 14 October 2016. The purchase price in the amount of 100 000 euros has been paid to the sellers. The process of the transfer of shares and the subscription for ownership interest has also been implemented. For the purposes of recapitalization of Cimos, TCH has already remitted 18.3 million EUR of fresh capital into a fiduciary account, which will be partly used as working capital to modernize production and improve the company’s operations and management, and partly to repay the debt to the bilateral banks. The buyer expects to repay most of the remaining debt to the bilateral banks by the end of May, as it provides Cimos with fresh liquidity in the amount of 15 million EUR.
The management of Cimos has executed fundamental operational restructuring since 2014, which was essential for the company’s future development. Parallel to this, efforts were underway to perform financial restructuring and find a new owner. This process has been successfully finalized today.
Upon the closure of the sale of Cimos, Dr. Imre Balogh, CEO of the Bank Assets Management Company, who was tasked with leading the consortium of sellers of 92.3% stake in Cimos, said: »At the end of the sale process of Cimos, which has lasted for nearly 2 years and has been exceptionally difficult and complex, we are most pleased to announce that the final key milestone has been reached and all parties involved are firmly convinced that this transaction represents the best possible outcome for Cimos and all its stakeholders at large. Following an extensive sale process, Cimos will finally get a new owner and, above all, a strategic partner, who is able to give the company a fresh start and ensure further growth and development. Palladio – through investments in Dynamic Technologies Group and TCH - has a significant experience and global presence in the automotive industry and a track record of turning around and transforming businesses. The investor will bring the skills and resources necessary to take Cimos further on the development path and fully restore its position as a best-in-class operator. BAMC has a vested interest in ensuring sustainable framework for future operations of Cimos and will closely follow the long-term progress of this industrial powerhouse so crucial for Slovenia as we retain our position as the main creditor in the restructured and privatized company.”
Lidia Glavina, President of Management Board of Slovenian Sovereign Holding is also very pleased with closing of sale of Cimos, saying: “Slovenian Sovereign Holding (SDH) played an active role as a member of the sale consortium, as it was essential that the process was successfully concluded in order to ensure that Cimos’s high-level of know-how and technology, as well as its manufacturing operations and jobs, are preserved to the maximum extent possible. Although the company is now performing much better and achieving better results than in the past, it is important to emphasize that it is of crucial importance for Cimos that a private investor enters its capital structure and provides fresh capital. This way, the buyers will prolong their business partnership with Cimos, providing an additional positive signal for the company’s future survival and performance.
It should be stressed that this milestone marks the successful conclusion of a highly demanding acquisition process of a highly specific nature, since the process was unfolding alongside the company’s operational and financial restructuring, which followed after the compulsory settlement was legally finalized. The sale procedure required negotiations with a large number of stakeholders, and we are very happy to announce that all the parties actively working together in the sale process firmly believed in Cimos’s potential and remained at the negotiating table until a deal was successfully negotiated, effectively securing real business opportunities for the company in the future.
We wish Cimos a great deal of business success and continued growth in the future.”
Gino Berti, CEO of TCH Cogeme also commented closing and future plans, saying: “The transaction demanded remarkable efforts from all stakeholders involved and it must be clearly stated that today’s result would not have been possible without the cooperation of the sellers, the management, employees and their representatives, Slovenian and non-local banks, customers, suppliers and also state and local politicians. We wish to express our gratitude, in particular to the ministers Zdravko Počivalšek and Goran Marić, who have made great efforts in settling a dispute that had been going on for two decades and represented a major obstacle to finalization of the Sale and Purchase Agreement.
The new shareholder and the management are committed to make their best efforts to promptly secure new orders for Cimos, which have dropped significantly in recent times due to, amongst other things, its stressed financial situation. Restoring the order back to acceptable levels will be a crucial task for the successful completion of the company’s turnaround, which is already well on its way. Constructive talks and negotiations have already been held with several key Cimos customers that are also long term partners of TCH, and the new shareholder and the management are confident that Cimos will, once again, gain their full trust.
Nevertheless, several challenging tasks still lie ahead and no-one should be led to think that the Group’s ongoing reorganization will yield immediate results, also considering the specifics of the automobile industry whereby lead times between new parts orders and delivery are normally in the range of 18 months. However, based on our proven track record, we are confident that a successful turnaround of Cimos can be completed within a reasonable time frame with our keen support.
TCH is proud to be a strategic partner of Cimos and is strongly committed to a long-term plan for a prosperous future of Cimos and all its stakeholders. For this purpose, we will invest 35 million euros by the end of the year. Over the next three years additional 50 million euros are planned to be invested into fixed assets to rationalize and consolidate Cimos’s industrial base, to put the Group in a position to manage successfully the cyclical downturns and upturns of the global automotive market. On this solid basis, it will be possible to leverage on the commercial and manufacturing potential of the TCH-Cimos group to the maximum possible extent.
The headquarters of the new group will be based in Koper. The R&D of our automotive group will also remain in Slovenia, which will create jobs with higher added value in the long run.”
Giorgio Drago, CEO of Palladio Holding, stated: “We are pleased to have successfully completed this complex transaction, in which we put great efforts in the last months. Moreover, I’d like to underline that this result couldn’t have been possible without the support of all the stakeholders involved. From now on, TCH and Cimos are ready to put together their efforts with the aim of creating the leading European group in the manufacturing of automotive components and strengthening the solid and long lasting partnerships with their respective customers. All the above, also leveraging on and benefiting from the significant experience that Palladio Holding has gained in the automotive industry through its investments and its demonstrated distinctive capabilities to successfully manage complex turnaround situations.”
Gerd Rosendahl, CEO of the Management Board of Cimos said: “We are deeply satisfied that after a process which has lasted nearly two years and all the efforts of interested parties, have finally brought us to a successful conclusion of privatization process. I am sure that Palladio Automotive and Cimos is a very good strategic fit.
This new alliance, Palladio Automotive and Cimos, with great synergy potentials and global production footprints, will support the future company success. Our position will also be strengthened by continuing with improvement activities, which, were based on the commitment and loyalty contributed by our employees, have already realized an enormous progress in our business operations in all regions where Cimos operates. We are proud of last few years’ accomplishments and we are looking forward to the challenges and opportunities within our new Company Group. We will create long-term sustainable value for our stakeholders, customers and employees."