Ask: Mr. Reime, HPI AG has announced that the joint representative of the bondholders, One Square Advisory Services S.à.rl, has resigned from his mandate with immediate effect. What does this mean for the creditors of HPI AG?
Jens Rhymes: The resignation of One Square Advisory Services is a significant step and a clear indication that the previous representative of the bondholders has significant concerns about the future development of HPI AG. For the creditors, this means that they are in a very uncertain situation. The joint representative plays a central role in representing the interests of the creditors, in particular in negotiations on restructuring or reorganization measures. The resignation signals that the previous representative is apparently not convinced that the measures proposed by HPI AG are in the best interests of the creditors.
Ask: HPI AG has also achieved a further deferral of the repayment of the 2011/2024 convertible bond until February 2025. How should creditors interpret this deferral?
Rhymes: The renewed deferral of the repayment obligation shows that HPI AG is currently unable to meet its financial obligations. The company needs more time to implement its restructuring plans and the deferral is an attempt to avert immediate insolvency. For creditors, however, this also means that they have to wait longer for their repayments, which further increases the risk. In addition, it remains unclear whether HPI AG will actually be able to generate the funds to service the bond by February 2025. It is a sign of the company’s ongoing difficult financial situation.
Ask: What does the clause mean that a new joint representative of the creditors can terminate the deferral within two weeks?
Rhymes: This clause gives the creditors a certain flexibility and power in the situation. Should a new joint representative be elected, he or she will have the option to terminate the deferral agreement and demand immediate payment of the deferred claims. This could put pressure on HPI AG to act more quickly or take other measures. However, this also carries the risk that termination could push HPI AG into insolvency, which could potentially mean even more unfavorable conditions for the creditors.
Ask: The statement also mentions a proposal by HPI AG that bondholders should waive interest and convert the outstanding amount into shares. How do you rate this proposal?
Rhymes: The proposal to convert the bond into shares and forego interest is another indication of HPI AG’s strained financial situation. A conversion into shares means that instead of a secure repayment of their capital, creditors will receive shares in a company that is in a very uncertain situation. This could lead to losses in the long term if share prices do not rise or the company does not return to a stable growth path. In addition, creditors will forego their interest, which will further reduce their return. It is a measure that must be carefully considered and creditors should be aware that it entails considerable risks.
Ask: What advice do you have for HPI AG’s creditors in light of these developments?
Rhymes: Creditors are advised to monitor the situation very closely and, if necessary, seek legal advice to better assess their options. Attendance at the creditors’ meeting on 22 August 2024 is crucial to represent their interests and vote on the proposed measures. It is important that creditors have a clear understanding of the risks and opportunities associated with the proposed changes, in particular with regard to the forbearance and the potential conversion of the bond into shares. The decision whether to accept or terminate the forbearance should not be taken lightly as it could have a significant impact on the creditors’ financial future.
Ask: Thank you for your assessment, Mr. Reime.
This interview is intended to give HPI AG’s creditors a clear idea of the risks and potential decisions they face and what steps they should take in this difficult situation.
