Nordex recapitalizing in order to return to profitability

Nordex AG has made progress in preparations for obtaining the urgently needed new financial resources. The company has signed an exclusive agreement with a group of financial investors. Furthermore, the key parties involved – with the exception of single banks - are basically in agreement as to the recapitalisation concept. The cornerstones of this are a reduction of capital at a ratio of 10:1, followed by a capital increase in cash, without exclusion of subscription rights, by up to 41.64 million new shares at a subscription price of EUR 1.00, a substantial reduction of bank liabilities against the issue of up to 12 million new shares and the extension of the remaining cash and bonding facilities. The capital write-down is geared to the expected development of equity up to the end of 2004. Negotiations with the investors on a placement guarantee for the new shares and with the banks are due to be completed in the coming two to three weeks. Following this, the refinancing concept will be published and presented for approval at the annual general meeting, scheduled for February 2005.

This recapitalisation is necessary to create an equity base and to finance growth in operations. The financing structure created in this way would fulfil the requirements for continuing the realignment of the Group and return it to profit territory. Based on preliminary consolidated financial statements, total revenues in the past financial year amounted to EUR 218.8 mn, approximately at the level of the previous year (EUR 215.3 mn) in spite of the 55% increase in order intake to EUR 230 mn. The current weak balance sheet structure and the limited liquidity for the interim financing of projects constituted an obstacle to a larger business volume.

In spite of the unexpectedly low revenue, the consolidated loss at EBIT level contracted as planned by about 80% to EUR -27.7 mn (previous year: EUR -172.1 mn). This positive earnings performance is the result of the almost complete implementation of the cost-cutting program. For instance, the cost-of-materials ratio dropped from 89% to 79%. Moreover, Nordex reduced personnel expenditure by 17% to EUR 34.5 mn (previous year: EUR 41.6 mn). Other operating expenses and income declined by as much as 28% to EUR 24.0 mn (previous year: EUR 33.3 mn). At the end of fiscal 2003/04 the Group had implemented some 80% of the restructuring program launched in summer 2003

As a result of the large balance-sheet and operating losses over the past two financial years, the Group’s equity to EUR 10.1 mn decreased as at September 30, 2004 (previous year: EUR 44.9 mn). Liabilities to banks stood at approx. EUR 49 mn. The guarantee facilities required for project business were largely utilized in full during the year to finance business.