LAHTI, Finland, Feb. 3, 2014 (Press Release) - Vaahto Group Plc Oyj reinforces its strategy, in accordance with which it under the lead of its new CEO, Vesa Alatalo, strongly focuses on the Process Technology business. The Company carries out its Process Technology business through its subsidiaries Japrotek Oy Ab and Stelzer Rührtechnik International GmbH. As Vaahto Group is continuing implementing the strategy change it commenced in the spring of 2013, it is planning the divestment of its loss-making Paper Technology business. The Board of Directors is considering options regarding the divestment of the Paper Technology business, with the primary option being the sale of the business.
Vaahto Group Plc Oyj writes down subordinated loans it has granted to Vaahto Paper Technology Oy. Due to the writedowns, the equity of Vaahto Group Plc Oyj falls negative. The writedown will not have a cash-flow effect. Due to losses expected to be incurred by Vaahto Paper Technology Ltd, it is expected that also its equity will fall negative during the first quarter of the year 2014. To reinforce the financial position of Vaahto Group and to finance the new strategy, Vaahto Group is planning on implementing a share issue during the first half of 2014.
The agreement that Vaahto Group reached with its creditors in late 2013 supports the liquidity of the Company. In accordance with the agreement, companies in the Vaahto Group are not required to repay loans from credit institutions during the year 2014. In connection of Vaahto Group receiving additional financing of two million euro from certain of its shareholders, creditors of the group relieved it of debts of one million euro in aggregate. It was further agreed that the creditors of the group will relieve the group of debts of two million euro in aggregate, provided that certain conditions in the financing agreement are met. The Company holds the view that such conditions on the debt relief will be met during the first quarter of 2014, but the creditors are obligated to relieve the company of the said debts also in the case that the conditions are met after the first quarter of 2014. Additionally, the financing arrangement includes a commitment by the creditors of relieving debts of a further one million euro if the Company is able to raise new equity through a share issue in an amount of no less than one million euro. The combination of the financing arrangement that has been reached, the partially conditional debt relief of four million euro in aggregate, the planned divestments of the Paper Technology business and the proposal for a share issue planned by the Board of Directors make clearer the direction of the business of the group under the new strategy along with supporting the group's financial position and liquidity.
The financial year 2013 earnings before interest, tax, depreciation and amortisation of the continuing businesses of Vaahto Group are expected to be clearly positive. Vaahto Group's group-level financial year 2013 earnings before interest, tax, depreciation and amortisation (for the entire business) are expected to be negative.