Four months after having entered into insolvency proceedings, Munich-based Cinterion Wireless Modules Holding GmbH has finalized the sale of the business operations belonging to Cinterion Wireless Modules GmbH (“Cinterion”), which provides modules for wireless machine-to-machine communication, to the French digital security systems company Gemalto. Approval by German cartel authorities has removed the last official barrier. Beforehand, Cinterion’s creditors, including EQT Expansion Capital II (“EQT Expansion Capital“) as the main creditor, agreed to the sale in the context of the insolvency proceedings.
“Cinterion got into financial difficulties as a result of the global economic crisis. From the start of these developments EQT Expansion Capital has worked towards giving Cinterion a secure future and has supported the company accordingly as best it could. The strong operational business with a brilliant management team has been of great help,” says Michael Föcking, Senior Partner at EQT Partners, advisor to EQT Expansion Capital.
EQT Expansion Capital supported Cinterion when the business was spun off from parent company Siemens in early 2008, and provided mezzanine finance for the buy-out of the company. Diverging from its usual investment focus – providing equity-like growth financing for medium-sized and privately owned companies – EQT Expansion Capital only provided debt financing to Cinterion and was at no point in time an equity owner. When Cinterion’s parent company Cinterion Holding ran into financial difficulties in mid 2009, EQT Expansion Capital sought to achieve a sustainable situation for business operations, engaging in negotiations with all stakeholders. “While the financial situation was difficult then, EQT Expansion Capital never doubted in Cinterion as a strong, market-leading company with a great deal of potential. The company achieved a positive operating result in 2009, shows a solid cash position, and is expected to reach its budget for 2010”, said Michael Föcking.
In March 2010, Cinterion Holding filed for insolvency. Throughout the insolvency process EQT Expansion Capital protected Cinterion’s business operations from any negative influence of the Cinterion Holding insolvency. EQT Expansion Capital lodged its own takeover bid for the operative business with the insolvency administrator as a fall back solution and thus secured the stability of the operating business as a partner for its customers and suppliers during this difficult phase. This also demonstrated the fund’s confidence in Cinterion’s employees and management team. The fall back solution envisaged a restructuring of the balance that included a considerable reduction of the total debt. During the auction process, run in an efficient and result-oriented manner by insolvency administrator Dr. Michael Jaffé, two offers from industrial bidders were received, with Gemalto offering the best terms and at the same time providing positive future prospects for the business, its staff and its customers. Gemalto disclosed that they are paying EUR 163m for the company which is more than the 2009 annual sales of EUR 145m.
“The completed transaction is an excellent outcome and beneficial for the company and its employees”, said Michael Föcking.
EQT Expansion Capital II is part of the leading private equity group EQT (being existing EQT funds or any successor funds advised directly or indirectly by EQT Partners or its subsidiaries, collectively “EQT”).
Contacts: EQT Partners
Michael Föcking, Senior Partner, EQT Partners +49 (0)69 247 045 0
Johan Hähnel, Communications & PR +46 8 506 55 334
EQT is a leading private equity group with investments in Northern and Eastern Europe, Asia and the US. EQT has specialized funds active within buyouts, growth financing and infrastructure. EQT deploys a unique industrial approach to investing, utilizing a vast network of industrialists to identify and develop companies. EQT’s model is based on clear corporate governance. The EQT funds mainly acquire or finance market leaders with considerable growth potential.
EQT serves as an active owner and works in close cooperation with the management of the companies it acquires, to develop and implement value-enhancing strategies. EQT acts as a catalyst for change in the companies that the funds invest in. The companies develop into market leading players through genuine and sustainable operational improvements.
EQT has raised approximately EUR 13 billion in 12 funds, which have invested approximately EUR 8.5 billion in more than 75 companies. EQT owned companies have more than 500,000 employees.
Since EQT’s first acquisition in 1995, the average annual growth in the Equity funds’ portfolio companies has been 12%, the number of employees has increased by 11% and earnings by 18% annually. More than 75% of the value creation is attributable to operational improvements and top-line growth.
EQT Partners, acting as investment advisor to all EQT funds, has more than 100 investment professionals with an extensive industrial and financial competence. EQT Partners has offices in Copenhagen, Frankfurt, Helsinki, Hong Kong, Oslo, London, Munich, New York, Shanghai, Singapore, Stockholm, Warsaw and Zurich.
More information can be found on www.eqt.se