Fuerstenberg capital notes’ interest payments may not be made in 2017

By Wendy Van Sickle

Columbus, Ohio, May 19 – Fuerstenberg Capital II GmbH may not make interest payments on its 5.625% perpetual capital notes in 2017, and possibly thereafter, as a result of a potential balance sheet deficit of Norddeutsche Landesbank Girozentrale, according to an ad hoc announcement.

Fuerstenberg, according to the notice, was made aware Thursday that the banking company, with which it has a profit participation agreement, expects a negative result on its unconsolidated financial statements for its 2016 financial year.

That negative result could, in turn, mean Norddeutsche would not pay a profit participation to Fuerstenberg for the financial year, and Fuerstenberg could share in a balance sheet deficit in the form of a reduction of its silent participation’s book value.

Such sharing of losses would, as long as the book value has not been fully replenished, exclude profit participations in subsequent financial years and trigger Norddeutsche’s option to terminate the participation agreement at a repayment amount corresponding to the reduced book value of Fuerstenberg's silent contribution.

The capital notes’ terms and conditions stipulate that payments on the notes are contingent on payments Fuerstenberg receives as a result of the participation agreement, and, if no such profit participation payment is received by the issuer, it will not be required to make interest payments on the notes. Interest payments on the notes would be in jeopardy starting in 2017, but the payments may jeopardized in subsequent years as well, the notice states.

Additionally, a reduction in the book value of Fuerstenberg’s silent contribution could result in the loss of could result in a repayment of the capital notes at an amount below their nominal amount.

The issuer is based in Hanover, Germany.

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