ProPart Funding to miss Aug. 3 securities payment in light of deficit

By Caroline Salls

Pittsburgh, July 22 – ProPart Funding LP will not make the profit distribution payment due Aug. 3 on its €150 million of dated upper tier 2 securities as a result of a balance sheet deficit for the fiscal year ended March 31, according to a Wednesday news release.

ProPart said the profit distribution payment for the last profit period as well as profit distributions in arrears for previous years, the payment of which was deferred, will be totally extinguished on Aug. 3.

The company said profit distribution payments under the securities are limited to the amounts of corresponding profit distribution payments received by ProPart under €150 million of cumulative profit participation securities issued by IKB AG.

The terms and conditions of those securities provide that profit distribution payments are excluded if and to the extent that payment of the profit distribution would lead to or increase a balance sheet deficit for the fiscal year of IKB to which the relevant profit period relates.

According to the release, IKB informed ProPart on June 16 that its supervisory board approved the audited unconsolidated financial statements of IKB for the 2014-2015 fiscal year, and those statements show a €2,167,300,000 balance deficit.

As a result of the balance sheet deficit, the total repayment amount on the dated upper tier 2 securities will remain reduced by €150 million, which ProPart said is equivalent to 100% of the repayment amount of the securities.

Because the book value of the securities will be zero on the repayment date, the repayment amount scheduled for Aug. 3 is also zero, the release said.

ProPart said it will use the repayment amount and other amounts received from IKB for a securities redemption payment.

The company said the reduced repayment amount of the cumulative profit participation securities and the dated upper tier 2 securities may be replenished in future fiscal years under specified circumstances.

ProPart is a St. Helier, Channel Islands, financial company.

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