Case Studies

First €70 million promissory-note-driven housing-construction transaction complete

Wohnungsbaugesellschaft Magdeburg (WOBAU) is the largest landlord of residential and commercial space not only in the regional capital of Magdeburg, but also the whole of Saxony-Anhalt. As a municipal company, WOBAU’s remit is to provide socially adequate residential space for a large part of the population through construction and real-estate activity.

In 2016, the company turned over €100.4 million and generated an EBITDA of €38 million. The promissory note is to enable refinancing and investment finance for the design of the cathedral quarter in Magdeburg.
Because of its longstanding business relationship and after an intensive phase of corporate finance consultancy, NORD/LB secured the mandate as sole arranger for placement of the first WOBAU promissory note transaction. Given its municipal background (the sole shareholder in WOBAU is the city of Magdeburg), Stadtsparkasse Magdeburg was involved in this transaction as “premium partner”, although it is only acting as an investor. NORD/LB is participating with a contribution of €3 million incl. yield-enhancing refinancing (Lettre de Gage) via NORD/LB Luxembourg S.A. Covered Band Bank.

First-time purchase of receivables in China

NORD/LB has successfully structured a purchase of receivables in China for a middle-market German corporate customer.

In December 2016 a framework agreement was entered into with the customer’s Chinese subsidiary that permits the subsidiary to engage in the revolving sale of receivables from trade receivables denominated in renminbi to a Chinese buyer. The purchase price is also disbursed in renminbi. This deal was enabled by a structure that is tailored to the specific features of Chinese law and invoicing practices and that sees the German-domiciled customer assume liability for its Chinese subsidiary. The debtor’s default risk is assumed by NORD/LB, meaning that the receivables sold are deducted from the customer’s group balance sheet. The monthly purchases are settled by NORD/LB’s Shanghai branch, which also guarantees local personal contact with the parties involved.

€ 135 m Schuldscheindarlehen (bonded loan) arranged for Montana Tech Components GmbH

In autumn 2016, NORD/LB together with a banking consortium arranged a Schuldscheindarlehen (SSD) with a volume of € 135 m and, therefore, the fourth very successful transaction of this type.

The SSD is for general corporate financing purposes and the refinancing of existing loans.

Montana Tech Components GmbH acts as a financing and management company for the Montana Tech Group. The 100% shareholder of MTC is the Montana Tech Components AG, which was founded in 2006. The Montana Tech Group is a technology-oriented industrial group and has a broadly diversified business model that is divided into four operating divisions: Aerospace Components, Metal Tech, Energy Storage (VARTA AG) and Industrial Components. Overall, the group commands leading market positions in fast-growing markets and focuses on key technologies. In view of its wide diversification MTC has only a low degree of cyclicality.

Bonded loan of EUR 350 million arranged for freenet AG

After freenet AG's successful placement of a bonded loan with a volume of EUR 560 million back in spring 2016, an arranger syndicate, including the Joint Lead Arranger NORD/LB, enabled the company to place another bonded loan of EUR 350 million.

The purpose of this bonded loan is to finance part of the syndicated loan agreed in March 2016. This transaction has allowed freenet to confirm its investment grade rating.

The freenet Group is Germany's largest network-independent telecommunications provider. The Group has also established itself in the digital lifestyle segment as a provider of customer household solutions that do not necessarily have to relate directly to telecommunications.

The freenet Group does not operate its own network infrastructure – it markets the mobile communications services of other mobile network operators under its own brand and on its own account. Alongside its own network-independent services and deals in the contract, no-frills and pay-as-you-go segments, the company also offers the network operators' original deals.

Acquisition financing for KSBG for the full takeover of STEAG/ STEAG’s debut promissory note (“Schuldscheindarlehen”) for growth

 KSBG Kommunale Beteiligungsgesellschaft GmbH & Co. KG, a consortium of municipal utilities from North Rhine-Westphalia (NRW), which had already acquired a 51 percent stake in STEAG GmbH from Evonik in 2011, is now the sole shareholder of STEAG GmbH.

NORD/LB was involved in financing the purchase price for the remaining shares as well as in replacing the residual financing of the initial 51% with acquisition financing. An additional eight consortium partners were attracted into this deal. At the same time, a promissory note (“Schuldscheindarlehen”) was issued on behalf of STEAG GmbH. With this capital markets-based financing instrument, STEAG is now well positioned for further investments in the power generation potential in the renewable energies area. Moreover, the financing has strengthened its competitiveness. The capital market transaction was met with high demand from investors and was oversubscribed.

Duravit Group - off-balance sheet solution

A low-cost and liquidity-preserving financing structure, which was tailored to DURAlog Duravit Logistik GmbH, combines need-based leasing with funds from the Kreditanstalt für Wiederaufbau (Reconstruction Loan Corporation).

In the industry, the Duravit Group is considered one of the leading providers in matters related to bathroom design and covers the entire area of bathroom furnishing with sanitary ware, bathroom furniture, accessories, bathtubs/sinks and wellness ideas. Duravit operates 27 investment companies around the world and is present in over 90 countries. The increase in sales within the Duravit Group led to a need for optimisation and expansion in the existing logistics capacity for the 100% logistics subsidiary DURAlog Logistik GmbH (in short: DURAlog). DURAlog is responsible for the execution of services in the area of logistics and transport and operates a central storage facility in Aachen. The planned expansion of the logistics capacity was supposed to be handled through the construction of a fully automated high bay warehouse on land already owned by the Duravit Group.

In collaboration with the leasing subsidiary LHI Leasing GmbH and in close coordination with the Duravit Group, NORD/LB structured a need-based, off-balance sheet financing solution for the construction of the high bay warehouse. We implemented the project with an investment sum in the double-digit million range through build-and-lease-back financing with the inclusion of funds from the Kreditanstalt für Wiederaufbau (Reconstruction Loan Corporation). The combination of both financing alternatives made it possible to provide low-cost and liquidity-protecting financing for the Duravit Group.

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