LONDON (Alliance News) - Hightex Group PLC Friday has requested a temporary suspension of its trading on AIM, as it awaits recommendations from the restructuring officer appointed by a German court on behalf of its creditors' committee.
The plastics company in undertaking a so-called Eigenverwaltung process for its principle operating subsidiary. The process is similar to a Chapter 11 process in the US where the unit will get protection from its creditors while it reorganises.
The company said that it will make a further announcement of the recommendations, which will be subject to court approval, as soon as practicable.
The decision was taken to apply for the "personal management" legal process, also known as "debtor in possession" or Eigenverwaltung in German, after Hightex couldn't get a resolution on the fraud it alleges was committed by the management of a Brazilian joint venture company.
Hightex's German operating unit had entered into a joint venture in Brazil to win contracts on the stadiums being built for last summer's football World Cup in the country. However, receivables from the joint venture had been cast into doubt due to difficulties in obtaining financial information from its Brazilian partner, and in June Hightex made a provision for the receivables.
This threatened its working capital position, and it opted to sell a majority 50.15% stake in its thermal cooling business SolarNext AG during 2013 to try to counter this, before agreeing a loan facility of up to USD10 million with TCA Global Credit Master Fund LP in February last year.
Shares in Hightex last traded down 4.4% at 0.153 pence.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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