March 20, 2006 On 03.17.2006, Naoussa Spinning Mills S.A. Group of companies and the creditor Banks National (NBG), Emporiki, Agricultural, Alpha Bank and EFG Eurobank reached an agreement for the financing of the Group's business restructuring plan and the refinancing of the Group's total bank debt.
Τhis agreement aims at achieving the Group's overall restructuring and recovery. The business restructuring plan, as prepared by the external advisor (Kantor) in cooperation with the group's management, includes actions for the overall restructuring of the corporate, organizational and financial structure of the Group, aiming at capitalizing on the leading position that the Group holds in the international market, at reducing the production, administration and selling cost as well as the financial cost.
The restructuring of Naoussa Spinning Mills S.A. Group of companies under the management of Managing Director Mr. Halarabos G. Vatistas assumes the merger via absorption in 2006 of the Fanco S.A., Rodopi Spinning Mills S.A. and Gallop S.A. by Naoussa Spinning Mills S.A., which furthermore will reinforce its own capital through the issue of a convertible bond loan or/and a share capital increase via rights issue. The underwriting of the share capital increase is guaranteed by the European Textile Investments Ltd via a European bank up to the amount of Euro 10 million. The above actions were approved by decision of the companies' Board of Directors on 03.17.2006 and of the parent company Klonatex Group of Companies S.A. The merger of the Group's companies, which was decided to be executed with balance sheet transformation date on 03.31.2006, as well as the other capital enhancing actions are under approval by the companies' General Meetings.
The financing of the Group's restructuring plan will be realized gradually according to specific target steps, by the above mentioned credit banks and the amount of EURO 25.5 million as well as by the share capital increase via rights issue of Naoussa Spinning Mills S.A. The capital injected by the agreed financing will be used to finance raw material supply (cotton and other raw material – Euro 10 million), the restructuring activities (Euro 10 million) as well as the settlement of overdue obligations (Euro 5.5 million). The amount of Euro 10 million from the share capital increase will be used to reduce the Group's bank debt.
After completion of the mergers and own capital reinforcement during 2006, the Naoussa Spinning Mills Group of companies total bank debt restructuring will be concluded up to the amount of Euro 140 million, under special terms to be agreed.
