Carl Zeiss restructures Carl Zeiss Vision’s finances and becomes majority shareholder
Carl Zeiss AG announced on 20 August that it has obtained approval from creditors for a proposal to restructure the corporate financing of Carl Zeiss Vision, the ophthalmic lens business it jointly owns with the private equity firm EQT.
Parent company Carl Zeiss AG, which makes lenses for products ranging from microscopes to cameras, will provide €90 million ($133 million) of new working capital, and will become majority owner.The group's second owner, Swedish private equity firm EQT, will refrain from putting in fresh funds and will see its shareholding diluted.
It is expected that Carl Zeiss Vision will reduce its €800 million loan debt by €200-300 million after the deal.In a statement, Carl Zeiss AG said that for the agreement to become effective, a majority of at least two-thirds of the lending banks with voting rights was necessary.
“We are pleased at the very positive reaction of the banks to this offer,” Dr Dieter Kurz, president and CEO of Carl Zeiss AG, said. “This means that we now have a good starting situation for the future of Carl Zeiss Vision.” As part of the new corporate financing, Carl Zeiss AG will become a majority shareholder in Carl Zeiss Vision.
The agreement includes the purchase of current loans by Carl Zeiss AG and their conversion into equity. Carl Zeiss Vision, which was formed in 2005 by Carl Zeiss AG and EQT after its merger with Sola International, received a €35 million cash injection when it first breached loan covenants in September 2008. They were breached again in September 2009, prompting a more comprehensive debt restructuring.
According to the Zeiss statement on 20 August, talks with the bank consortium for the restructuring of the corporate financing of Carl Zeiss Vision were necessary because, with the certified financial statements for fiscal year 2008/09, individual covenants of the current credit agreements had been breached, the Zeiss statement said. However, capital and interest payments were made on a regular basis; there were no defaults on payment. The restructuring of the corporate financing will become effective in the balance sheets of Carl Zeiss Vision and Carl Zeiss AG in fiscal year 2010/11. Lenders include banks such as Commerzbank, Credit Suisse, Deutsche Bank, Lloyds and Prudential M&G.
“We are strategically investing in a company that excellently supplements our portfolio,” Dr Kurz said. “Carl Zeiss Vision is a leading brand in the global eyeglass market—especially on the growth markets in Asia.”
The chief negotiator for Carl Zeiss AG in the bank negotiations, Dr Michael Kaschke, member of the Carl Zeiss AG executive board and president and CEO from 1 January 2011, said: “We set long-term sustainability as our top goal in the talks and were therefore able to achieve a good and future-proof result for all parties involved. The approval by the banks has confirmed our strategy. With the financial strength of the Carl Zeiss Group, we can finance the required investments through our own efforts. We firmly believe in the major potential offered by Carl Zeiss Vision. Due to the extremely broad approval obtained, we will shortly be consulting with our supervisory board on the purchase of the oversubscribed portion of the cash offer.”
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