Ultrasonic AG
Ultrasonic AG: Communication with former CEO, Investigations proceed
Ultrasonic AG / Release of an announcement according to Article 37x of the WpHG [the German Securities Trading Act] 25.02.2015 10:43 Interim report according to Article 37x of the WpHG, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Ultrasonic AG: Communication with former CEO, Investigations proceed - No fresh insights regarding the financial and earnings position - Production and sales apparently proceed, scope and profitability unclear - Appointed Task Force in touch with Qingyong Wu - New management on Hong Kong level Cologne, 25 February 2015 - Ultrasonic AG (Prime Standard, ISIN DE000A1KREX3, US5) publishes today the delayed interim report for the second half of FY 2014. Building on a local Task Force of lawyers and investigators, the new CEO of the German holding since his appointment has been trying to collect reliable information regarding the liquid funds as well as the assets, liabilities, financial position and profit or loss of the operating Chinese subsidiaries. The implemented Task Force draws on more than 15 years of working experience with German and Chinese companies and good contacts and was thus able to restore communication with the former CEO, Qingyong Wu, and to arrange a call between Mr. Wu and the new CEO, Mr. Harald Zender, which was hold on 10 February 2015. Evidently, ULTRASONIC branded products are still sold in the shops, the production at the old site is running at a reduced level and at the new production site investments into the expansion of the infrastructure have been made. Within the last three months, staff accommodations and service tracks were completed and a gatehouse was erected. But currently, the production at the new site has not started. In addition, due to public available information, the office floor in Xiamen, which was bought by SUOLI (China), is for sale in the course of an enforced public auction. So far, Management and Supervisory Board of the German holding company have gained no further reliable information regarding the assets and earnings situation of the operative Chinese subsidiaries. Major developments in the reporting period On 8 August 2014, with the prior approval of the Supervisory Board, the Management Board of the ULTRASONIC Group signed an agreement between the Hong Kong holding China Ultrasonic Outdoorwear Holdings Co. Ltd. and the consortium manager Nomura International (Hong Kong) Ltd. on a USD 60 million credit facility. Along with Ultrasonic's strong internal financing capacity, this long-term credit facility should increase scope for future organic and inorganic growth. Subsequently, both former board members drew the entire credit facility in two tranches. Mr. Quingyong Wu and the Ultrasonic AG act as guarantors for the syndicated loan. On 12 September 2014, Minghong Wu, COO of Ultrasonic AG, informed the Supervisory Board that he had to go to the hospital for medical treatment due to ongoing health problems. He would therefore be taking six months leave of absence. During this period his operational duties should be assumed by the company's CEO Qinyong Wu and two long-standing senior managers from Sales and Marketing. On 16 September 2014, Chi Kwong Clifford Chan, CFO of Ultrasonic AG, informed the Supervisory Board that he had been unable to reach both, the company's CEO, Qingyong Wu, and the company's COO, Minghong Wu for several days. Inquiries initiated thereupon revealed that both, CEO and COO, apparently had left their homes and were not traceable. Moreover, Mr. Chan was informed by the accounting department that most of the company's cash funds at PRC and Hong Kong levels had been transferred being no longer in the company's range of influence. This excluded cash facilities of the German holding company which still had a relevant six-figure amount in command. Mr. Chan and the Supervisory Board entered talks with authorities and business partners, trying to gather further information to clarify the situation. On 17 September 2014, Cathay United Bank, Co., Ltd., exercising its function as facility agent of the syndicated loan, notified Ultrasonic AG that there were subsisting events of default as defined in the credit facility agreement between Ultrasonic and Nomura International (Hong Kong) Ltd. concluded on 8 August 2014. As a result of this, in accordance with a respective clause of the facility agreement, the USD 60 million credit facility together with interest of USD 180,236.89 unexpectedly had been accelerated as of 17 September 2014, being immediately due and payable. However, the creditors agreed to enter into further negotiations with the CFO and the Supervisory Board of Ultrasonic AG who for the moment managed to avoid potential insolvency procedures at Ultrasonic AG. Within a Supervisory Board meeting on 17 September 2014, Qingyong Wu and Minghong Wu were dismissed from their posts in the Management Board of Ultrasonic AG. At the same time, Chi Kwong Clifford Chan who had intended to step down for family related reasons following the successful negotiation of the credit facility with Nomura, agreed to withdraw his resignation scheduled for 30 September 2014 to support the company to clarify the situation. His designated successor, YEUNG Man Kin, who should have assumed the post from 1 October 2014, meanwhile rescinded his contract in the course of the events. On 22 September 2014, Ultrasonic AG announced that the dismissed former CEO of Ultrasonic AG, Qingyong Wu, had contacted Clifford Chan, the CFO of the Company, and the German broker by phone, claiming that he would return to the company and that he would also return the funds. However, an attempt by a representative of the Ultrasonic Supervisory Board to personally contact Mr. Wu in Xiamen failed. Also in the following weeks, for all intensive efforts, Management Board and Supervisory Board in accordance with creditors failed to clarify the state of facts. On 21 October 2014, by resolution of the Supervisory Board, Ultrasonic AG appointed Dr.-Ing. Harald Zender to the Management Board of the company with effect from 27 October 2014. In addition to his long-standing experience in the areas of private equity and management consulting, Dr. Zender has extensive knowledge of the Asian market: As board member at Kinghero AG, he has taken several measures to stabilize the company and has gathered wide experience in cooperating with Chinese authorities. Moreover, in the past he was a member of the Management Board of RHI AG, the worldwide largest manufacturer of refractory products, and in this context responsible for the Chinese market and the ASEAN countries. As part of this decision and in consultation with the Supervisory Board, the company's CFO, Chi Kwong Clifford Chan, stepped down with effect from 27 October 2014. The reason given for his decision to step down was that he had not obtained any further information on the assets and operating business of the operating company in China. Consequently, he was not able to make any further contribution to clarifying the situation as he had hoped. In December 2014, Dr. Harald Zender und Harald Wiebe were additionally appointed as new directors of the China Outdoorwear Holdings Co. Ltd. in Hong Kong, a 100percent subsidiary of the Ultrasonic AG. Mr. Wiebe is an expert in China business and has been living in Hong Kong for more than 20 years. The restructuring is important in respect of the further measures in China and the communication with Cathay United Bank, the facility agent of the syndicated loan agreement between the China Outdoorwear Holdings Co. Ltd. and Nomura International (Hong Kong) Ltd. Financial and earnings position Due to the lack of information, the company can make no reliable statement regarding the assets, financial and earnings position of the operating Chinese subsidiaries. However, it is very likely that the assets, financial and earnings position of the ULTRASONIC Group has deteriorated significantly since the publication of the interim financial statements for the first half year of 2014. As of 31 January 2015, the German holding, Ultrasonic AG, had liquid funds of EUR 382,024.00 compared to payables of EUR 73,624.00. Currently, the Management Board is in negotiations with the lending banks, to avoid the use of Ultrasonic AG as guarantor. Such a claim would cause the immediate insolvency of Ultrasonic AG. Ultrasonic AG has no operating business, therefore it generated no revenues in the reporting period. As of 31 January 2015, Ultrasonic AG had just one employee, the director Dr. Harald Zender. The interim statement is also available at Investor Relations/Publications on the company's website at www.ultrasonic-ag.de. For enquiries: Ultrasonic AG Dr. Harald Zender CEO E-Mail: ir@ultrasonic-ag.de Disclaimer: This document is no offer for the purchase of securities in the United States of America. Securities may only be sold or offered for sale with the previous registration under the U.S. Securities Act of 1933 in the actual valid version or without previous registration only pursuant to an exemption. The shares of Ultrasonic AG (the 'Shares') have not been registered under the U.S. Securities Act of 1933 in the actual valid version and may not be sold or offered in the United States. This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the 'Order') or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as 'relevant persons'). The Shares, which are referred to, are only available to relevant persons and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. 25.02.2015 The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: Ultrasonic AG c/o BPG mbH, Graf-Adolf-Platz 12 40213 Düsseldorf Germany Internet: www.ultrasonic-ag.de End of Announcement DGAP News-Service ---------------------------------------------------------------------------
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