RHI divests itself of US companies due to asbestos, capital restructuring agreed with core banks

14. January 2002

In view of the soaring number of asbestos claims, the RHI AG management has decided to discontinue financing the operational restructuring of US participatory interests and to put all companies comprised in the RHI Refractories Holding Company up for sale. As a result, this step will avert any further financial strain to RHI AG from asbestos risks.

Currently, all options to sell the companies are under review. Thus will deconsolidate not only Narco but also the GIT group with Harbison-Walker and A.P. Green as per 31 December 2001. With a turnover of EUR 1,000 million, RHI will continue to assert itself as the global market leader in the refractories business, even without the US companies.

On account of the valuation adjustment of claims against the US members of the group as well as risk provisions and restructuring costs, the RHI group is expecting to report an annual loss of some EUR 870 million for 2001. An extensive capital restructuring program was agreed with the core banks, which bases on the booming refractories business in Europe, Asia, Central and South America as well as Canada.
This concept will enable all RHI group members in the said regions to reliably and consistently meet their operational and financial obligations vis-à-vis all their business partners and further promote the refractories business. The long-term financing is secured and guaranteed by the banks. The concept involves the following key elements:

  • Release of revenue and capital reserves amounting to approx. EUR 400 million
  • Conversion of liabilities to banks totaling EUR 400 million into subordinat mezzanine capital, free of interest and repayment for five years
  • Issue of a subordinate convertible bond amounting to more than EUR 144 million

Regarding the convertible bonds, which require a vote, an extraordinary Shareholder’s Meeting will be convened presumably in mid-February 2002.