Componenta reports €1.9 million of adjusted EBITDA for first quarter

By Caroline Salls

Pittsburgh, May 16 – Componenta Corp. reported €1.9 million of adjusted EBITDA for the first quarter of 2017, an improvement over the negative €1.1 million of adjusted EBITDA for the same period of 2016, according to a news release.

The company said net sales corresponding to current continued business operations increased 9% to €46.3 million.

“Particular facts contributing to this improvement are the reductions in fixed costs and in financing costs,” president and chief executive officer Harri Suutari said in the release.

“Profitability in the period for comparison was weakened by the production stoppages caused by the tight liquidity situation at that time and by extra transport costs. A further factor was that because of the corporate restructuring situation the forges in Sweden have had to rely on more expensive material supplies.

“There is still potential in continued operations to improve profitability. The positive trend shown here creates a basis for continuing the restructuring proceedings and for their success.”

The company said profitability was weakened by the temporary cancellation of the refund of Finland’s energy tax, by the impact at the foundries of a rise in material prices, by the special transport related to delivery problems at the iron foundry in Turkey and by more expensive material supplies because of the restructuring proceedings in the forge operations.

Restructuring programs

Componenta said the administrator of the corporate restructuring proceedings for Componenta and Componenta Finland Oy filed draft restructuring programs with the District Court of Helsinki, and the court decided in April to continue processing the programs.

If the draft restructuring program is carried out in line with proposals, the company said the group’s restructuring debt is estimated to be just around €23 million.

According to the release, no accrued interest costs were recognized in the quarter for non-preferential interest-bearing restructuring debts, since they will be treated as having lowest priority, and, after the restructuring proceedings begin, accumulated accrued interest will be cut 100%.

In addition, Componenta said it has reached an agreement on financing from its main customers in Finland and Sweden, and this will cover the working capital needs for operations.

The group’s liquid assets at the close of the period stood at €4.1 million.

The company said the restructuring proposal for Componenta Wirsbo AB took effect on Jan. 14 and for Componenta Arvika AB on Jan. 21.

Company goals

In accordance with the rulings of the local courts, the companies intend to pay SEK 40 million of the group’s external restructuring debt in July. To achieve this, Componenta said it must succeed in arranging external funding for the companies in order to ensure sufficient liquidity.

The primary goal is to postpone payment of the restructuring debts until January 2018 and to arrange refinancing by then, the release said.

On March 6, the restructuring process for Componenta Främmestad AB was extended until June 1.

Componenta said it is aiming to sell its shares in Componenta Dökümcülük Ticaret ve Sanayi AS, and the company’s objective is a comprehensive solution in which the Turkish subsidiary accepts the restructuring program proposals for Componenta, Componenta Finland Oy and Componenta Främmestad.

Another goal, according to the release, is for Turkish club loan banks that have financed the Turkish subsidiary to release Componenta and Componenta Främmestad from all commitments and liabilities based on the club loan agreement, including releasing them from a €80 million loan guarantee.

Componenta said it expects continued operations to have net sales of €150 million to €170 million in 2017. EBITDA is expected to be €5 million to €10 million.

Componenta is a supplier of cast and machined components and is based in Helsinki, Finland.

© 2015 Prospect News.
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