Tecnotree Corporation has decided to apply for restructuring proceedings
Stock Exchange Release
5 March 2015 at 9.50 am EET
Tecnotree Corporation’s business operations have been loss-making for several years. In the unaudited financial review release for 1 January 2014 – 31 December 2014, published on 30 January 2015, the Company announced that the result of the whole year 2014 remained a loss despite the encouraging final part of the year. The Company’s situation is still challenging, even though the Company estimates that its operating result of 2015 will improve from 2014.
The Company’s fourth quarter net sales and adjusted operating result set new records. During the same period the Company’s customer deliveries included a large number of third-party products (computers and licenses) leading to an increase in the trade payables. Significant part of the Company’s customers operate in countries where central banks restrict the availability of currency, for which reason the payments to the Company are delayed. The Company’s customers in these areas are leading operators, who have always made their payments.
In the financial review release the Company told that also its cash situation remained tight during the review period. The change in cash and cash equivalents during 2014 was EUR -4.2 million. The Company had no unused credit facilities at the end of the year. The Company has previously informed the markets that it has restructured its financing, renegotiated the repayment schedules and covenants of its loans as well as implemented certain cost reduction measures. The Company has been looking into obtaining additional financing, primarily equity financing, to strengthen its financial position and to reduce equity risks.
In addition, in the financial review release Tecnotree announced that at the end of the year the Group’s shareholders’ equity of stood at EUR 16.9 million. However, the shareholders’ equity of the parent company was only EUR 2.2 million while its share capital stood at EUR 4.7 million. This means that the shareholders’ equity of the parent company has fallen below half of the share capital. According to section 23 of chapter 20 of the Limited Liability Companies Act, if a public company’s shareholders’ equity according to the balance sheet is less than half of its share capital, the Board of Directors shall without delay convene a General Meeting to consider measures to remedy the financial position of the company. On 26 February 2015 the Company notified that it will postpone the publication of its official financial statements for 2014 and possibly also the date of the Annual General Meeting as the presentation of these measures in the financial statements will need to be ensured before publishing the official financial statements.
The Company has actively searched for a solution to improve its financial standing and carefully studied different options for solving the situation. Based on the study the Company concludes that it would in the best interest of the Company and its stakeholders, if the Company applied for restructuring proceedings in accordance with the Act on Restructuring of Enterprises. The Company assess that its difficulties are temporary, and via restructuring it would be possible to remedy the Company’s financing and equity structure and thus secure the long-term continuation of the Company’s business operations. Restructuring, if materialized, would ease the debt liability of the Company and consequently also the shareholders’ equity. The main creditor of the Company, Nordea Bank Finland Plc, together with another creditor, have announced being in support of placing the Company in the restructuring proceedings.
Based on the above, the Board of Directors of Tecnotree has decided to file an application for restructuring proceedings with the district court of Espoo. The application will be filed today. According to section 24 of chapter 20 of the Limited Liability Companies Act, the application has been filed by the Board of Directors, as the matter is urgent. According to the same paragraph, the Board of Directors shall without delay convene the General Meeting to decide on the continuation of the application.
The Board of Directors proposes to the Extraordinary General Meeting of Shareholders to be held on Friday 27 March that the application for restructuring proceedings will be continued.
Measures to be taken based on the result shown by balance sheet and possible other measures to be taken to remedy the Company’s financial situation in accordance with section 23 of chapter 20 of the Limited Liability Companies Act will be handled in the Annual General Meeting of the Shareholders to be convened later. In addition to the filing of the restructuring application and the measure proposals to the general meetings of shareholders, the Company continues to look into obtaining additional equity-type financing.
The filing of the restructuring application has no direct effects on Tecnotree’s business operations and the Company continues to carry out the agreed customer projects and serve its customers as usual.
The Board of Directors
Ilkka Raiskinen, CEO, tel. +358 (0)45 311 3113
NASDAQ OMX Helsinki Ltd
Tecnotree is a global provider of telecom IT solutions for the management of products, customers and revenue. Tecnotree helps communications service providers to transform their business towards a marketplace of digital services. Tecnotree empowers service providers to monetise on service bundles, provide personalised user experiences and augment value throughout the customer lifecycle. With over 1000 telecom experts, Tecnotree serves more than 100 service providers in over 70 countries. Tecnotree is listed on the main list of NASDAQ OMX Helsinki with the trading code TEM1V. For more information on Tecnotree, please visit www.tecnotree.com