BRP Renaud und Partner mbB
BRP Renaud und Partner mbB: Termination of Fürstenberg bonds

DGAP-News: BRP Renaud und Partner mbB / Key word(s): Bond
25.03.2021 / 13:40
The issuer is solely responsible for the content of this announcement.

In a letter dated November 25, 2020, Norddeutsche Landesbank – Girozentrale – Anstalt öffentlichen Rechts (“NORD/LB“) declared that it would extraordinarily terminate the silent participation agreements it had concluded with the issuers of the capital notes (“Fürstenberg bonds“) with effect from December 31, 2022.

NORD/LB justifies its extraordinary termination of the silent participation agreements on November 25, 2020 by stating that the asset contributions (re-)financed by the issuers of the Fürstenberg bonds via the issue of the Fürstenberg bonds can no longer be attributed to core capital.

At the time of the termination notice, the book value fell significantly short of the nominal amount of the asset contributions.

If the extraordinary termination of the silent participation agreements were effective, the creditors of the Fürstenberg bonds would lose significantly more than half of the capital provided to NORD/LB.
However, in our legal opinion, the extraordinary termination of the silent partnership agreements is invalid for a number of reasons.

The provisions of the identically structured silent partnership agreements require in each case that a significant change in the tax or regulatory treatment of the contributions and their participation in profits and losses occurs and that the parties to the silent partnership agreements have entered into amicable negotiations for the purpose of adjusting the silent partnership agreement to the changed legal situation prior to extraordinary termination.

In our legal opinion, none of these conditions were met at the time of termination.

The implementation of Basel III, which NORD/LB is seeking to justify for the extraordinary termination it has now declared on November 25, 2020, dates back years. In its capacity as a capital provider, NORD/LB had itself entered into negotiations on the adjustment of contracts with contractual partners in which it had invested as a silent partner at an early stage before the implementation of Basel III. It is therefore all the more surprising that NORD/LB, apparently in an effort to avoid its liabilities to its creditors, is now invoking this implementation of Basel III that took place years ago for the extraordinary termination of the silent participation agreements.

In our legal opinion, the extraordinary terminations of the silent partnership agreements can no longer be based on these changes to the regulatory provisions, which occurred years ago.

The extraordinary termination has to be declared in accordance with the identically structured silent partnership agreements when the change in regulatory requirements occurs.

This contractual requirement is in line with the general principles developed by case law on the extraordinary termination of continuing obligations, according to which the extraordinary termination of a continuing obligation for cause must be declared within a reasonable period of time after knowledge of the reason for termination.

Irrespective of this, in our legal opinion the other requirements for extraordinary termination were not met at the time of the termination declarations.

Neither has there been a change in the profit and loss participation of the asset deposits (re-)financed by the issuers via the issue of the Fürstenberg bonds, not even as a result of Basel III more than six years ago, nor has NORD/LB entered into amicable negotiations with the issuers on the adjustment of the silent participation agreement to the changed legal situation, neither before, at, nor shortly after the implementation of Basel III as of January 1, 2014.

On behalf of affected bondholders, we have therefore requested NORD/LB to withdraw the extraordinary termination of the silent participation agreements and to compensate the bondholders for the losses incurred as a result of the unjustified extraordinary termination of the silent participation agreements and for any further losses that may be incurred in the future.

We assume as a matter of course that the managing director of the issuers concerned, Dr. Heinrich Hahn, attorney-at-law, who is also managing director of Schindhelm Rechtsanwaltsgesellschaft mbH, will also act. As managing director of all three issuer special purpose entities, he is or must be aware of all of the aforementioned circumstances. As the managing director of the issuers of the Fürstenberg bonds, he is obligated vis-à-vis the investors in the Fürstenberg bonds issued by the issuers to take action in order to avert any damage that has occurred or is imminent from the investors, who are, to a very considerable extent, private investors.

We advise affected bondholders to take a united stand against NORD/LB’s conduct.

This notice relates to the following securities:

Capital Notes WKN A0EKD5 / ISIN XS0216072230 (Fürstenberg I bonds)
Capital Notes WKN A0EUBN / ISIN DE000A0EUBN9 (Fürstenberg II bonds)
Capital Notes WKN A0EUB2 / ISIN DE000A0EUB29 (Fürstenberg III bonds)

Investor Contact:
Attorney at Law Dr. Ulrich-Peter Kinzl
E-Mail: Ulrich-Peter.Kinzl@brp.de
Attorney at Law Aljoscha Schmidberger
E-Mail: Aljoscha.Schmidberger@brp.de
BRP Renaud und Partner mbB
Königstraße 28
70173 Stuttgart, Germany
Tel: +49 711 16445-302
Fax: +49 711 16445-100
http://www.brp.de

25.03.2021 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de