ESPG AG launches restructuring project according to StaRUG due to impending insolvency

ESPG publishes half-year figures and launches restructuring project according to StaRUG

• Revenue increases to EUR 7.9 million (H1-2023: EUR 6.3 million)
• Net operating profit reaches EUR 3.5 million
• EBT of EUR -4.1 million negatively impacted by increased financing costs
• Management Board and Supervisory Board resolve to file a restructuring plan in pursuant to StaRUG
• Investors commit fresh liquidity of around EUR 9.5 million in the event of successful restructuring

Cologne, 10 September 2024: ESPG AG, a property company specialising in science parks, today published financial figures for the first half of 2024. The half-year figures confirm the continued robust development of the science park portfolio in a very challenging property market overall, while the increased financing costs are weighing on earnings and jeopardising ESPG AG's continued existence.

Revenue increased year-on-year to EUR 7.9 million (H1-2023: EUR 6.3 million). This growth is due in particular to successful lettings and inflation adjustments to existing rents. Net operating income reached EUR 3.5 million and thereof increased compared to the previous period H2-2023. Nevertheless, high financing costs, which were higher than in the first half of the previous year, had a negative impact of EUR -4.1 million on EBT. The options pursued to finance the interest payment on the 2018/2026 bond due on 1 October 2024 have not yet been successfully implemented and the Management Board is no longer pursuing them. The Company is therefore at risk of insolvency.

In order to continue the business plan for the further development of the Science Park portfolio and avert existential threats to ESPG AG, a restructuring plan will be filed with the competent local court in accordance with the German Act on the Stabilisation and Restructuring Framework for Companies (StaRUG). Property-holding subsidiaries and the operating business are not affected by this. The restructuring plan shall include a waiver of the creditors, primarily the bondholders, of all claims in return for appropriate compensation. A potential participation of the bondholders participating in the Company's future success will also be considered.

It is planned to submit the restructuring plan to the court in the short term with the objective that its provisions will take effect by the end of October 2024. The interest payment on the 2018/2026 bond due on 1 October 2024 will no longer be made.

Subject to certain conditions, in particular the legal effectiveness of the restructuring plan, investors have already pledged to provide fresh liquidity of around EUR 9.5 million to secure the Company's continued existence.

Frank Günther has been appointed General Representative and Chief Restructuring Officer of ESPG AG to support and implement the StaRUG process.

Frank Günther, Chief Restructuring Officer and Chief Representative of ESPG AG: ‘With over 25 years of experience in the restructuring of financial liabilities and the successful implementation of more than 50 transactions, I am familiar with these situations. We are working intensively to secure the financial stability of ESPG AG quickly and sustainably. The StaRUG procedure is a very good instrument for this and has proven its worth many times over in the recent past. The Company's operational development confirms the positive outlook. The bondholders should also benefit from this. Nevertheless, further measures are necessary to sustainably improve the financial situation of ESPG AG and strengthen the Company in the long term. I am convinced that we will quickly find a good solution in the interests of all stakeholders.’

ESPG will inform the capital market and the public about the progress of the restructuring measures and the further course of the process in accordance with legal requirements. The aim is to stabilise the Company's financial situation in the long term and to reach an agreement with the creditors, in particular the bondholders.

 

Profit and Loss Statement     (in €) H1 2023 H1 2024 Gross rental income   6.326.017   7.917.942 Expenses relating to letting of property  (2.385.592)  (4.390.662) Net Operating Income   3.940.425   3.527.280 Personnel expenses     (525.888)     (522.298) Other operating income      415.385      409.712 Other operating expenses  (1.426.897)  (1.231.789) Depreciation and amortization       (61.919)       (61.026) Revaluation result 3     (268.509)                -   Earnings before interest and taxes (EBIT)   2.072.596   2.121.879 in % of total income from property mgmt. 33% 27% Financial income      419.203      336.971 Financial expenses  (5.258.595)  (6.511.204) Earnings before taxes (EBT)  (2.766.795)  (4.052.354) in % of total income from property mgmt. -44% -51% Income taxes     (268.626)        14.374 Group earnings  (3.035.421)  (4.037.980) in % of total income from property mgmt. -48% -51%

 

Balance Sheet     (in €) H1 2023 H1 2024 Investment properties 228.500.000 228.606.400 Loans to minorities 8.661.785 9.860.760 Other fixed assets 1.549.311 1.518.109 Fixed assets 238.711.096 239.985.269 Cash 4.374.653 3.638.225* Other current receivables 2.611.303 2.190.913 Other current assets 157.193 202.122 Trade receivables 88.712 68.158 Income tax receivables 68.481 133.964 Non-current assets held for sale 0 0 Current assets 7.143.148 6.031.260 Total assets 245.854.244 246.016.529 Subscribed equity capital 23.431.820 23.431.820 Shareholder Reserve   (1.187.357)       911.038 Consolidated balance sheet result 22.217.406 14.352.881 Equity (shareholders of the parent entity) 44.461.869 38.695.739 Minority shares 9.692.564 9.576.422 Total equity 54.154.432 48.272.161 Financial loans 127.054.834 130.451.615  -- of which Senior secured debt 127.054.834 124.321.615  -- of which Junior debt 0 6.130.000 Bond 46.365.263 45.985.478 Deferred tax liabilities 10.509.594 10.318.391 Liabilities held for sale, trade and income tax 1.595.479 1.629.867 Other liabilities 6.174.642 9.359.017 Liabilities, total 191.699.812 197.744.368 Total of Liabilities and Equity 245.854.244 246.016.529       Senior Secured Net LTV 53,7% 52,8% Secured Net LTV 53,7% 55,5% Total Net LTV 74,0% 75,6%       * of which €1.1m in interest are paid on 1st of July and €0.76m are blocked cash reserves

 

About ESPG
The European Science Park Group (ESPG) is a real estate company specialising in science parks. The Company’s focus is on the development of science parks, predominantly characterised by tenants from future-oriented sectors such as life sciences, green technologies or digital transformation, which benefit from their proximity to each other and their direct proximity to universities, hospitals or research locations. ESPG’s portfolio already comprises 16 science parks across Europe with a total area of 126,000 square metres. The sites are generally located outside metropolises, in areas that are considered science clusters or have a high concentration of innovative companies.

Press contact:
Jan Hutterer
T +49 40 60 91 86 83
M +49 172 3462831
espg@kirchhoff.de