Institutional Creditors of Hamburg Commercial Bank AG Deny Support for New Financing Round of the Bank

HAMBURG & KIEL, Germany--()--Charles Barker Corporate Communications GmbH is issuing this press release on behalf of the group of creditors outlined below.

Two groups of more than 35 institutional investors (the "Creditors") and their affiliates who manage in aggregate more than EUR 850 billion today announce that they will not participate in Hamburg Commercial Bank AG's ("HCOB" or the "Bank") upcoming senior bond financing.

The Creditors include multiple German insurance companies as well as investment funds based in Germany, elsewhere in Europe and the United States. The two creditor groups collectively own over EUR 1.4 billion of tier 1 instruments issued by HCOB and are separately advised by the law firms of Quinn Emanuel Urquhart & Sullivan, LLP and BRP Renaud & Partner mbB.

This statement is in reaction to news that the Bank is holding a series of fixed-income investor meetings across Europe over the next two weeks following which HCOB plans to issue new senior-ranking debt.

In the Creditors' view the Bank, over many years and continuing today, has exhibited a total disregard for creditors' rights and the rule of law. To make matters worse, in the Creditors' opinion, HCOB's management has knowingly misled investors.

The recent actions of the Bank under its new private equity owners, who include Cerberus Capital Management, L.P., J. C. Flowers & Co., and GoldenTree Asset Management LP (together the "New Owners"), have only further increased the Creditors' concerns.

In the opinion of the Creditors, HCOB's actions adverse to its creditors include:

  • Using illegal accounting practices with the objective of artificially creating losses. This was achieved, in part, by impermissible increases to its reserve (ยง 340g of the German Commercial Code).
  • Violating numerous contractual provisions starting in 2009 with the objective of harming creditors.
  • Impermissibly using losses carried forward to write down its tier 1 instruments multiple times with the same loss.
  • Selling an NPL portfolio to certain affiliates of its New Owners below market value at the expense of creditors.
  • Terminating its tier 1 instruments unlawfully thereby purportedly crystallizing the above impermissibly-generated losses and providing a windfall to the New Owners.

The Creditors also have no confidence that disclosures by the Bank in its prospectuses and statements made by HCOB's management can be relied upon. HCOB, including its CEO Stefan Ermisch and the CFO Oliver Gatzke, has, in the opinion of the Creditors, made statements which were self-serving, incorrect and misleading about the Bank's accounting, its outlook and planned actions. As late as 26 November 2018, HCOB made a disclosure that could only be read to suggest that its tier 1 instruments would be written-up to par and would pay coupons in the future. Yet a few days after this date, the tier 1 instruments were terminated.

Contacts

Charles Barker Corporate Communications GmbH
Thomas Katzensteiner / Tobias Eberle
+49 69 794 090 -25 / -24
Thomas.Katzensteiner@charlesbarker.de
Tobias.Eberle@charlesbarker.de

Contacts

Charles Barker Corporate Communications GmbH
Thomas Katzensteiner / Tobias Eberle
+49 69 794 090 -25 / -24
Thomas.Katzensteiner@charlesbarker.de
Tobias.Eberle@charlesbarker.de