La Seda files for voluntary insolvency

On June 17^th, 2013, the Board of Directors at La Seda de Barcelona declared the following:

Pursuant to article 82 of Act 24/1988 of July 28th on Stock Exchange Markets and further to the successive Relevant Events published by the Company in relation to the debt renegotiation process it is hereby informed that: 

1. Today, June 17th 2013, La Seda de Barcelona, S.A. (“LSB” or the “Company”) has filed with the Commercial Court of Barcelona a petition for declaration of voluntary insolvency, in compliance with the resolution adopted by the Board of Directors. 
2. The referred petition for declaration of voluntary insolvency has been filed for LSB and the following companies of the Group which are based in some of the European Union member states, pursuant to Insolvency Act 22/2003 from July 9th (“Insolvency Act”) and (EC) Regulation Nr.1346/2000, from May 29th on Insolvency Proceedings: Artenius España, S.L.U.; Artenius Green, S.L.U.; Industrias Químicas Asociadas LSB, S.L.U.; Artenius Italia, S.p.A.; Artenius Hellas Holding, S.A.; Inmoseda, S.L.U.; APPE Benelux, N.V.; APPE Deutschland, GmbH; APPE UK, Ltd; APPE France, SAS; APPE Iberia, S.A.U. and APPE Polska Spolka Z Ograniczona Odpowiedzialnoscia. 
   Moreover, the Board of Directors of the Company has agreed to file for insolvency or an equivalent proceeding according to the applicable legislation for the Group subsidiaries based in Morocco (Artenius Pet Packaging Maroc, SARLAU) and Turkey (Artenius Turkpet, A.S. and APPE Turkpack, A.S.), as soon as the necessary relevant documentation has been finalized and the legal and formal requirements complied with, to file for this proceeding with the local competent courts. 
3. After having analyzed to its full extent and effect the economic and financial situation of LSB and its Group, as well as the state of the refinancing procedure of its debt, the Board of Directors has taken this decision to file for voluntary insolvency based on the following facts: 
   - The debt refinancing process of the Company was initiated in September 2012 due to adverse market conditions during the past two years and, particularly due to oversupply, high raw material costs and insufficient margins. 
   
   - Initially, a refinancing proposal was negotiated that was backed by the shareholder BA PET BV under specific conditions, which included a 40 million Euros capital increase of the Company, the subscription of which was guaranteed by this shareholder. 
   
   - BA PET BV withdrew its subscription commitment for the capital increase mentioned in the previous paragraph on April 1st 2013, after failing to reach an agreement between BA PET BV and the Steering Committee of the syndicated loan. Hence this refinancing proposal was rejected by the Board of Directors on that date, having tried since then to reach a refinancing agreement with the Steering Committee of the syndicated loan to restructure the Company’s debt. 
   
   - Having reached this point, on April 11th 2013, the Board of Directors discussed the possibility of filing for voluntary insolvency, following the proposal of the director BA PET BV or to negotiate the proposal of the Steering Committee of the syndicated loan. The Board of Directors decided to negotiate the proposal of the Steering Committee of the syndicated loan, based on the conviction that it was the best option for the stakeholders of LSB: it preserved more value for the shareholders, allowed the lenders to recover a major part of the debt and guaranteed jobs. 
   
   - On April 24th 2013, the Company reached an agreement with the Steering Committee of the syndicated loan based on the refinancing proposal that had been submitted by it. This agreement had to be ratified by 75% of the amount of the Company’s syndicated debt, which in its turn should represent more than half in number of the syndicated lenders. 
   
   - On the other hand, the shareholder of the Company, BA PET BV, together with its related entity BA PET II BV (jointly, “BA PET”), presented a new refinancing proposal for the Company’s debt on April 26th 2013, although, as it was communicated in the Relevant Event from May 14th 2013, the Company has received communications from several lenders with a relevant share in LSB’s syndicated loan, in which they inform about their decision not to support the refinancing proposal backed by BA PET, so that this refinancing proposal has been considered non-viable as to its possible implementation. 
   
   - As of today, the Board of Directors of the Company has stated that the ratification of the agreement reached between LSB and the Steering Committee of the syndicated loan has not taken place within the term required by the Company, having reached to date the support of the majority of the Company’s syndicated debt amount, with no votes against, but without reaching the figure of 75%. 
   
   - As a consequence, none of the refinancing proposals of the Company’s debt has reached to date the necessary support and consensus level that may allow to achieve the legally required thresholds for its implementation despite the enormous work and effort deployed by the Board of Directors as well as the Restructuring Committee of the Company to try to reach a satisfactory agreement for the main lenders and shareholders of the Company. 
   
   - Consequently, the debt restructuring process, which is essential in order to guarantee the Company’s activity, is blocked by the impossibility to achieve an agreement led by the main shareholder or by the Steering Committee of the syndicated loan. 
4. The decision to file for voluntary insolvency has been adopted, in addition to complying with a legal duty, as a measure to grant viability to the Company and the Group and as the best possible alternative to protect the rights of all its lenders. In this sense, the Company is willing to submit an agreement to its lenders that guarantees on the one hand the interests of such lenders, as well as those of the shareholders and employees of the Company and – on the other hand – LSB’s ongoing management. 
5. Pursuant to article 44.1 of the Insolvency Act, the declaration of insolvency will not interrupt the continuity of the business activity which LSB and its Group has been conducting up to date. 

Yours faithfully, 

The Board of Directors of La Seda de Barcelona, S.A.