B.V., a subsidiary of Hero Cycles Ltd, the world’s largest cycle manufacturer
by volume, has acquired a significant equity stake in Germany’s largest manufacturer
of cycles Mitteldeutsche Fahrradwerke AG (MIFA) for 15 million Euros
(approximately Rs 119.5 crore). MIFA manufactures a comprehensive range of
bicycle models from normal cycles to electric ones at its single integrated
manufacturing plant in Sangerhausen in Germany.
listed on the Frankfurt Stock Exchange and its annual sales figures are in
excess of a 100 million Euros (Rs. 7, 981 million or Rs 798.1 crore).
earlier invested large amounts of borrowed capital (debt) in new technology to
develop high-end cycles which is one of the primary reasons for its present
began its journey from Ludhiana, Punjab and later partnered with Honda to
become the largest two-wheeler manufacturer in the country.
Cycles and MIFA deal comes at a time where debt repayment was becoming an issue
for the German cycle manufacturer. Now they look to turn around the company in
a span of 18 months. The Board of directors will soon be re-organised and in
due course of time a plan will be devised to improve the present condition of
MIFA with the help and participation of their new found Indian leadership.
company had a few years back acquired Berlin-based Grace, an e-bike
manufacturer, and Bavaria-based high-end bicycle forging company Steppenwolf. This
acquisition will give Hero Cycles access to the critical Electronic Drive Unit
(EDU) technology, used in e-bikes.
will be spending an additional 4 million Euros (Rs 31.8 crore) as capital
expenses in restructuring the acquired company.
a formal announcement made by Mifa, it noted that OPM Global B.V had entered
into a general commitment, as part of an investment agreement to underwrite
capital increases in cash in the amount of Euro 15 million from MIFA's existing
authorised capital and thus invest up to EUR 15 million of equity into MIFA. “The
cash capital increases shall comprise a 10pc capital increase with subscription
rights being excluded and a subsequent rights issue with a total number of 4.9
million new shares to be issued. OPM Global B.V. has undertaken to subscribe
all such shares which together with additional existing shares to be
transferred from certain existing shareholders would result in an overall
participation of the investor of up to 47pc”, the note read.
In a separate
note posted on August 22, 2014 on the Mifa website, Hans-Peter Barth, CEO of
MIFA said, "The considerable strengthening of MIFA's equity base also
sends an important signal to our employees and business partners. With HERO, we
have gained a strategic investor that believes in MIFA's future, and is also
prepared to make a major financial investment in ensuring that our company
returns to full health. We are optimistic that, with HERO's investment, not
only have we placed an important building block for our financial
reorganisation, but we have also found a valuable partner for the future
structuring of our operating business."
Weniger, Chief Recovery Officer (CRO) at MIFA, regards the basic agreement as a
decisive step towards the company's further restoration to financial health:
"Following intensive and constructive negotiations, the agreement that has
been reached today sends more than a positive signal for all involved. In
particular, the reorganisation structure that has now been agreed shows how
determined the negotiating partners have been to find a solution which is
compatible for all sides, and which forms the basis for MIFA's long-term
future. We have now found such a solution. Thus, the reorganisation of MIFA has
reached the home straight."
another press note issue as early as May 19, 2014, it noted that : Investment
agreement with Indian bike manufacturer HERO concluded, equity investment
pursuant to capital increases from authorised capital
THE FULL RELEASE—
19 May 2014 - MIFA Mitteldeutsche Fahrradwerke AG ("MIFA", German
security identification number: A0B95Y, ISIN: DE000A0B95Y8) announces that the
company OPM Global B.V., a subsidiary of Hero Cycles Ltd. ("HERO"),
has entered into a general commitment today as part of an investment agreement
to underwrite capital increases in cash in the amount of EUR 15 million from
MIFA's existing authorised capital and thus invest up to EUR 15 million of
equity into MIFA. The cash capital increases shall comprise a 10% capital
increase with subscription rights being excluded and a subsequent rights issue
with a total number of 4.9 million new shares to be issued. OPM Global B.V. has
undertaken to subscribe all such shares which together with additional existing
shares to be transferred from certain existing shareholders would result in an
overall participation of the investor of up to 47 %. The investment commitment
by OPM Global B.V. entails significant financial contributions of MIFA's
financing partners and is subject to various conditions precedent, especially
to the condition of a haircut in the amount of EUR 15-20 million of the
bondholders as well as an exemption from the German Financial Supervisory
Authority (BaFin) from the obligation to make a public takeover offer under the
The German Securities Acquisition and Takeover Act.