Componenta’s Swedish subsidiary files for bankruptcy
Componenta Corporation, Stock Exchange Release, Insider Information, on 25 September 2019 at 11.10
Sweden-based Componenta Främmestad AB has filed an application for bankruptcy with the local district court today, 25 September 2019.
As told in the half-year financial report 2019, Componenta has sought to improve the profitability of its business operations in Sweden and reduce the amount of capital employed in them. As part of its measures aimed at improving profitability, the company has engaged in negotiations on the renewal of its customer contracts. However, the negotiations failed to reach an outcome that would have secured profitable business in the future, whereupon Componenta Främmestad AB decided to file for a bankruptcy.
“We have already made determined efforts to improve the profitability of Componenta Främmestad AB for a long time, but because it was not possible to make the operations profitable on a permanent basis, it was no longer feasible to continue the company’s operations. The profitability of the company's customer relationships was poor, and this could not be significantly improved in negotiations pertaining to renewing the customer agreements. In addition, the operations engaged considerable amounts of capital, the refining level of products was low, and the majority of the business consisted of the refining and supplying of castings from outside the Group. The changes that occurred in Componenta’s group structure resulted in Componenta Främmestad AB’s reduced strategic significance for the Group. Therefore, in the future we are able to concentrate on component and series sizes aligned with our core business as well as developing the diversity of our service range in Finland by offering cast and machined components on a one-stop-shop basis. This yields significant benefits especially for machinery and equipment manufacturers who seek quality and efficiency from ready-to-install components,” says Marko Penttinen, President and CEO of Componenta Corporation.
Componenta Främmestad AB’s restructuring programme was confirmed by the Skaraborg District Court on 3 July 2017, and the court ruling gained legal force on 24 July 2017. In March 2018, the company paid restructuring debts of around EUR 2.3 million to creditors outside the Group and a salary guarantee to the amount of EUR 0.6 million to the Swedish government. A separate repayment schedule extending up to 2024 was agreed on for the EUR 2.5 million restructuring debt receivable of Componenta Group’s former company in Turkey. The repayment schedule was tied to Componenta Främmestad AB’s EBITDA, the annual maximum payment being 25% of EBITDA. The repayment of the debt concerned was postponed by one year in 2019, because EBITDA was negative during the review period of 1 July 2018 to 30 June 2019 under the repayment schedule.
Componenta Corporation and Componenta Finland Oy have no guarantees or other securities given on behalf of Componenta Främmestad AB’s liabilities. Following the bankruptcy of the Swedish subsidiary, the Group's restructuring debts are reduced by EUR 2.5 million to EUR 12.7 million. Furthermore, the capital loan of EUR 27 million shown in other reserves in Componenta Främmestad AB’s balance sheet will be removed from Componenta Group’s balance sheet following the bankruptcy. The bankruptcy of Componenta Främmestad AB will not jeopardize the equity of Componenta Corporation, Componenta Finland Oy or Componenta Group. Furthermore, the bankruptcy will not jeopardize the ability of Componenta Group to continue as a going concern. Componenta Främmestad AB will be presented under discontinued operations in the consolidated financial statements.
President and CEO
For further information, please contact:
Marko Penttinen, President and CEO, tel. +358 10 403 2200
Marko Karppinen, CFO, tel. +358 10 403 2101
Componenta is an international technology company. Componenta specializes in supplying cast and machined components to its global customers, who are manufacturers of vehicles, machines and equipment. The company’s share is listed on Nasdaq Helsinki.