Novares says it has successfully exited French pre-receivership legal proceedings following new investment from existing shareholders and additional financing from a pool of banks.
The deal secures the future of Novares, allowing it to continue to serve its customers and reopen sites globally, when conditions allow.
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On 28 May, the Commercial Court of Nanterre approved the deal through which Novares received EUR146m (US$162m) in loans and investment to resolve its short-term liquidity shortage: EUR71m in the form of a loan from banks under the French PGE State Guarantee Scheme, EUR45m in loans and EUR30m in equity from shareholders, Equistone Partners Europe and Bpifrance.
In parallel, Novares’ total debt has been significantly reduced and converted into equity. This follows opening of French proceedings (‘redressement judiciaire’) – similar to US’ ‘Chapter 11’ – requested by Novares Group holding company on 29 April.
During the process, a continuation plan was crafted and seven parties made offers, culminating in the Court of Nanterre’s final decision to opt for the continuation plan.
Novares, a global plastic component supplier to the automotive industry with a EUR1.4bn, took the legal step as a result of the COVID-19 pandemic, which led to the shutdown of its operations globally for an extended period and resulted in significant cash-flow shortage.
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By GlobalDataNovares, which operates in 23 countries with 45 manufacturing plants, received the EUR45m injection of cash from shareholders, Equistone and Bpifrance on 18 May, allowing it to start reopening 13 of its 19 European manufacturing sites.
The new deal and the associated cash injection, agreed on by 84% of creditors and 100% of shareholders, guarantee the long-term future of the company and will allow it to reopen the remaining sites, mainly in the US, which were closed as a result of the pandemic, as and when conditions allow.
“We are pleased to have found a deal that gets us over this short-term liquidity hurdle and allows us to continue the Novares journey,” said Novares CEO, Pierre Boulet.
“Novares was a solidly-performing company when the pandemic hit, and will continue to be so, thanks to the support of our shareholders, our Banks, the French State (CIRI), our Legal Administrator and our advisors.
“Our customers rely on our products and expertise and we are committed to ramping up production to deliver in line with their expectations.”
