- Posted by jbehrendt on June 11, 2009
You remember from my last posting that both the board and the supervisory board approved the project to go ahead, and to bring it to the final decision stage, which in this case means both a formal approval by several supervisory boards, and by general assembly meetings of both companies planning to make the discussed carve-outs. Since then, not much happened, at least not something fundamentally changing the overall plan for the upcoming weeks. However, slowly time pressure increases - as you remember, the latest date for registering the carve-outs is 31.8.2009 if it should take effect backwards as of 1.1.2009, based on the financial statements as of 31.12.2008. Handing in the required documents to the trade registry becomes a challenge by its own - we talk about around 4,000 pages, which mostly need to be scanned, and then submitted in appropriate slices in electronic form to the trade registry. Expecting that a lot of companies try to do so last minute in August, it may become very crititcal to prepare everything only at the end of August - and since final documents can only be prepared after the general assembly meetings, this means general assembly meetings should take place as early as possible.
On the other hand, maintaining a 4-week-period between submission of the final carve-out documentation to all decisionmakers, and running the general assembly meetings, is required. In this case, "final" means really final, so no more changes should take place afterwards. This somehow contradicts with the still outstanding binding information from the tax authorities indicating if they are willing to approve the intended carve-outs as fulfilling the necessary conditions for being tax-neutral, without the requirement to dissolve hidden reserves, and pay income taxes on it. We were informed that this information will be provided mid of July, but from mid of July to end of August it is only 6 weeks, and considering the risk of a late general assembly meeting described above, as well as the need to update all carve-out documentation, carve-out balance sheets and - most relevant - valuation of the two entitities after getting the detailed feedback from tax authorities, this is not very long.
Independent from this, internal discussions among both shareholders and employees - which have a significant say in the approval process, being represented with 50% in relevant supervisory boards -, are going on, and additional meetings are scheduled for several groups of shareholders, and for several groups of employees (more exactly, specific worker's councils) within the next weeks. Of course all of them have their specific questions and concerns which needs to be addressed. Besides that, some of them may have specific ideas how to use their required approval as a special asset in negotiations about other subjects, which may not necessarily need to be linked to the project itself.
In total, the next weeks will decide if we can succeed or not in completing the project. The critical issues of feedback from tax authorities, timing of general assembly meetings and registration to the trade registry, finalizing all documentation, and getting approval from both shareholders and relevant worker's councils or supervisory board members from the employee side, all need to be completed successfully, and all this within the next 2-3 months. If just on issue remains unsolved, it means the end, or at least a temporary stop, for the project. Keep fingers crossed.