Holders of approximately 1 billion EUR of listed HSH bonds file lawsuit against HSH Nordbank AG in Germany

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DGAP-Media / 2019-01-07 / 09:37 
 
Hamburg/Kiel, 7 January 2019 
 
On 28 December 2018, 18 investment firms based in Germany, elsewhere in 
Europe and the United States (the "Investors") that hold approximately 1 
billion EUR of listed tier 1 instruments issued by HSH Nordbank AG ("HSH") 
filed a lawsuit against HSH at the Kiel district court in Germany. The 
Investors seek a write-up to par of the tier 1 instruments and monetary 
damages for improperly missed coupons, for a total claim against HSH in the 
amount of 1.0 billion EUR. The Investors filed the same claims on behalf of 
the issuer of the indirectly issued SPHERE and SPARC tier 1 instruments in 
the alternative, for the benefit of all SPHERE and SPARC bondholders, 
increasing the total claims against HSH to 1.4 billion EUR. 
 
HSH has engaged in various schemes over a number of years, seemingly for the 
sole purpose of writing down improperly the tier 1 instruments. The 
Investors key allegations are, without limitation: 
 
· HSH has made impermissible increases to its reserve (§ 340g of the 
German Commercial Code). HSH has used this reserve, whose lawful use is 
solely the protection against general banking risks, with the purpose of 
writing down its tier 1 instruments and avoiding coupon payments on them. 
HSH has also failed to release these reserves. 
 
· HSH has violated numerous contractual provisions of its tier 1 
instruments. 
 
· HSH recognized a significant loss on a loan portfolio sale to affiliates 
of its new owners in its 2017 accounts, resulting in a write-down of the 
tier 1 instruments. HSH sold the portfolio below market value and 
structured the sale to impermissibly benefit its new shareholders at the 
expense of the Investors. 
 
· HSH is seeking to unlawfully terminate its tier 1 instruments. 
 
· HSH has violated the terms of the SPHERE tier 1 instruments by issuing a 
termination notice while the instrument is below par, which is 
contractually prohibited. 
 
· HSH is planning to impermissibly use losses carried forward to write 
down its tier 1 instruments multiple times with the same loss already 
recognized in HSH's 2017 accounts. 
 
These actions have significantly harmed all investors of HSH tier 1 
instruments, including numerous German and international institutional 
investors and countless retail investors. If HSH is allowed to get away with 
the actions announced in its 30 November 2018 release, namely to call the 
listed tier 1 instruments at 15% of their nominal value, this would create a 
1.6 billion EUR windfall profit at the expense of the tier 1 instrument 
holders. This improper windfall would inure solely to the benefit of the new 
owners. They would then have effectively purchased the bank for free. 
 
In preparation for their lawsuit against HSH in Germany, the Investors 
sought judicial assistance pursuant to 28 U.S.C. 1782 in the United States 
to obtain discovery from certain affiliates of the new owners of HSH: 
Cerberus Capital Management, L.P., J.C. Flowers & Co. LLC and GoldenTree 
Asset Management L.P. On 17 December 2018, the _Southern District of New 
York_ granted, in large part, the Investors' request, and authorized the 
issuance of the requested subpoenas which have now been served. 
 
While the Investors move forward with this litigation and reserve all rights 
with respect to further legal options, they remain willing to engage with 
HSH and its advisors to find a mutually agreeable solution. 
 
*Contact for holders of HSH tier 1 instruments:* 
Dr. Nadine Herrmann, Partner, Quinn Emanuel Urquhart & Sullivan, LLP 
+ 49 40 89728-7000 
[e-mail] 
 
*Press contact:* 
Charles Barker Corporate Communications GmbH 
Tobias Eberle / Thomas Katzensteiner 
[phone] / -25 
[e-mail] 
[e-mail] 
 
End of Media Release 
 
Issuer: Charles Barker Corporate Communications GmbH 
 
2019-01-07 Dissemination of a Press Release, transmitted by DGAP - a service 
of EQS Group AG. 
The issuer is solely responsible for the content of this announcement. 
 
The DGAP Distribution Services include Regulatory Announcements, 
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Archive at www.dgap.de 
763649 2019-01-07 
 
 

(END) Dow Jones Newswires

January 07, 2019 03:37 ET (08:37 GMT)