Holders of bonds issued by HSH Nordbank AG amounting to around EUR 1 billion are filing a lawsuit against the bank in Germany
DGAP-Media / 07.01.2019 / 09:37
Hamburg / Kiel, January 7, 2019
18 investors based in Germany, other European countries and the US, who hold listed Tier 1 bonds of HSH Nordbank AG in the amount of around EUR 1 billion ("bondholders"), filed a lawsuit against HSH on December 28, 2018 Nordbank AG ("HSH") filed with the Landgericht Kiel. Bondholders are demanding the write-up of Tier 1 bonds at their face value as well as damages for unduly paid interest. The total amount of claims against HSH amounts to 1.0 billion euros. In the alternative, the bondholders have made the same claims against the issuer of the indirectly issued SPHERE and SPARC bonds in favor of all holders of SPHERE and SPARC bonds, which increases the total claim against HSH to EUR 1.4 billion.
HSH has been doing things for many years whose sole purpose was to unduly write down the bonds. The central allegations of the bondholders include the following:
HSH has improperly formed reserves in accordance with Section 340g HGB. These reserves, which according to the purpose of the law are intended solely to hedge against general banking risks, were used by HSH with the aim of writing down the bonds and avoiding interest payments. HSH has also failed to liquidate these reserves.
HSH has violated numerous treaty provisions of its Tier 1 bonds.
HSH posted a significant loss for the 2017 financial year as a result of the sale of a loan portfolio to new owners, which led to a write-down of Tier 1 bonds. HSH sold the portfolio below market value and structured the sale in such a way that the new owners benefited inappropriately at the expense of the bondholders.
HSH attempts to unlawfully terminate Tier 1 bonds.
HSH violated the terms of the SPHERE Tier 1 Bonds by announcing a Termination, although the bond was quoted below its nominal value, which is not contractually permitted.
HSH plans to improperly use loss-making contracts to write down its Tier 1 bonds at the same loss that HSH already booked in 2017 on several occasions.
These actions have significantly damaged all holders of HSH Tier 1 bonds, which include numerous German and international institutional investors and countless private investors. Allowing HSH to implement its plan announced on 30 November 2018 to repurchase listed Tier 1 bonds at 15 per cent of its face value meant a profit of € 1.6 billion at the expense of Tier 1 holders. Bonds of HSH. This unjustified advantage would only benefit the new owners. In fact, they would have bought the bank for free.
In preparation for the lawsuit against HSH in Germany, the bondholders in the USA have filed a so-called discovery application pursuant to Title 28 USC, § 1782. This is a request for mutual legal assistance against the new owners of HSH affiliated companies Cerberus Capital Management, LP, JC Flowers & Co. LLC and GoldenTree Asset Management LP On December 17, 2018, the court of the Southern District of New York has the motion the bondholder granted in large part. The so-called subpoenas, with which the applicants are obliged to provide information, have now been sent to the defendants.
While the bondholders continue to pursue the legal process and reserve all legal options, they are still prepared to engage in dialogue with HSH and its advisers in order to find a mutually agreed solution.
Contact for holders of HSH Tier 1 bonds :
Dr. Ing . Nadine Herrmann, Partner, Quinn Emanuel Urquhart & Sullivan, LLP
+ 49 40 89728-7000
NadineHerrmann@quinnemanuel.com
Press contact :
Charles Barker Corporate Communications
Tobias Eberle / Thomas Katzensteiner
+49 69 794 090 -24 / -25
Tobias.Eberle@charlesbarker .com
Thomas.Katzensteiner@charlesbarker.de
Note: This German text version is a translation of the English text. The English version is authoritative.