A-TEC Industries explained

A-TEC Industries AG was an international industrial holding company based in Vienna, Austria. It belonged to the Austrian industrialist Mirko Kovats. A-TEC was quoted on the Vienna stock exchange from the end of 2006 until February 2014.^[1] In 2007, the group of companies accounted for nearly 14.000 employees and had a turnover of more than 2 billion Euro.^[2] A-TEC was active in the areas of power plant construction, drive technology, industrial engineering and minerals & metals.

In October 2010, A-TEC went bankrupt and the company's assets were sold off by a trustee over the course of four years. The sell-off was completed by mid-2012.^[3] This was the third largest insolvency in Austria. The liquidation process began in October 2018.

History

A-TEC Industries AG has undergone several acquisitions since its founding in 2001, and its history is closely intertwined with that of its founder and director, Mirko Kovats. In 2004, the company changed its name from ATB Beteiligungs GmbH to A-Tec Industries GmbH, and the legal form was changed from a GmbH to an AG. An initial public offering (IPO) was completed in 2006 as part of a capital increase, and the shareholder structure as of December 31, 2006 was documented as follows:

• 55% M.U.S.T. Private Foundation
• 32% free float shares
• 7% J.E. Loidold private foundation
• 6% RPR private foundation

In 2007, Ronny Pecik sold his A-Tec shares, increasing the free shares to 33%.

Acquitions

Through A-Tec, Kovats frequently engaged in the takeover of economically troubled companies on advantageous terms, after which they underwent restructuring. Notable acquisitions include:

Drive technology Division

• 2001 ATB Group from the company of the Federal Republic of Austria for industrial policy measures ("ATB Gruppe von der Gesellschaft des Bundes Österreich für industriepolitische Maßnahmen (GBI)"). ATB is a manufacturer of electric motors specialising in motors for domestic and industrial usage. At the time of acquisition by GBI, ATB had approximately 1,200 employees and reported a consolidated revenue of approximately EUR 142 million. GBI sought a buyer with an industrial background and at the time, Kovats had an interest in the machine tool producer Emco.
• 2003 ATB Technologies GmbH, Austria
• 2004 ATB Morley Limited, UK – purchase price EUR 8.3 million.
• 2004 ATB Selni, France – purchase price EUR 3.2 million. Since the value of the assets less the liabilities of this company was higher than the purchase price, A-Tec recorded negative goodwill of EUR 433 thousand.
• 2005 ATB Sever, Serbia – purchase price EUR 4.1 million. After a tender, the A-Tec division ATB acquired the 63% shares in the electric motor manufacturer SEVER held by the Serbian state, the rest remained in free float. With the acquisition, ATB expanded its product portfolio to include motors of large sizes, standard motors and high-voltage motors. Sever had 2000 employees and achieved a turnover of 26 million euros. ATB agreed to assume 7 million euros of debt, finance a social plan and invest 16 million euros.
• 2005/2006 Lindeteves-Jacoberg, Singapore – purchase price EUR 21.8 million. ATB thereby acquired electric motor factories in the UK, Germany, Poland and China, as well as the Schorch, Brook Tamel Crompton and Western Electric brands. As noted in the prospectus, the Lindeteves Group had made a loss since 2003; the company was therefore in need of restructuring. A debt restructuring was carried out.
• 2007 David McClure, UK – purchase price EUR 0.8 million
• 2007 Laurence Scott, UK – purchase price EUR 4.7 million. Laurence Scott is a supplier of electric motors (sales EUR 19.4 million) specializing in the oil and gas industry. Due to cash flow problems, he found himself in bankruptcy proceedings in 2007 despite having enough orders. The takeover was carried out by the British ATB subsidiary Morley.

Plant Engineering Division

• 2002 Austrian Energy & Environment (AE&E) (Anlagenbau)
• 2003 Von Roll Inova-Gruppe, Switzerland
• 2004 Babcock Power Espana, Spain - purchase price EUR 3.7 million. The Spanish state holding company SEPI purchased the boiler-making company previously owned by Babcock Borsig, which employed 400 people at the Bilbao site. As the value of the assets minus liabilities was higher than the purchase price, A-Tec recorded negative goodwill of EUR 30.6 million. SEPI funded the cleanup with roughly EUR 110 million, of which EUR 12 million was generated in profit. A restructuring provision was also recognized in the 2004 financial statements, which totaled EUR 14.4 million for Babcock Espana.
• 2004 AE&E Chennai Works Ltd. and I.D.E.A. Private Ltd., India - purchase price EUR 6.3 million. The Babcock Borsig Group included two companies: Chennai Works, which specialized in boiler making, and I.D.E.A., which was focused on engineering.
• 2005 Alstom's boiler and power plant business in Asia and the Pacific region: this was merged into Austrian Energy & Environment (Australia) Pty.ltd - purchase price EUR 7.8 million. The French Alstom group was required to divest the Industrial Boilers and Plants division due to EU requirements, with AE&E taking over significant parts of the division. This included four locations across Europe and Australia, with Sydney (Australia) taken over in 2005 and the other locations in Cologne and Nuremberg (Germany) and Brno (Czech Republic) taken over in 2006. At the time, the division employed 450 people and had a sales volume of approximately EUR 400 million. Christian Schmidt, the CEO of AE&E at the time, saw the German locations as complementary to Von Roll's activities, while the Czech and Australian locations were complementary to AE&E Austria.
• 2006 Alstom business in Germany and the Czech Republic - this was incorporated into AE&E Inova (Germany) and AE&E CZ - purchase price EUR 1 million.
• 2007 Global Power Asia/AE&E Nanjing Boiler Co. – purchase price EUR 18.2 million.
• 2007 Lentjes GmbH, Germany from GEA – purchase price EUR 1.2 million. A-Tec acquired Lentjes for an amount of one euro, with additional costs associated with the purchase. Lentjes specializes in the construction of plants for energy production from fossil fuels, biomass, and waste. As part of the agreement, A-Tec was to increase its capital in the range of the low double-digit millions, while the seller was to take on the risks from largely finished projects. Following a detailed evaluation, the EU Commission gave its approval for the acquisition.
• 2008 KRB, Switzerland - purchase price EUR 2 million
• 2008 Mechanical Installations International, UK – purchase price EUR 8 million. A British company specialising in machinery and industrial plant installation, construction, maintenance and servicing, as well as pipe work and steel construction, had 110 employees and a turnover of EUR 21 million in 2007. This company was taken over due to existing orders from AE&E in the area of thermal waste treatment within the United Kingdom.

Machine Tool Division

• 2004 EMCO, Austria (machine tool construction). EMCO is a mechanical engineering company headquartered in Hallein, Austria, which in 2006 employed 870 people. In 1997 Mirko Kovats acquired a 50% stake in the company, undertaking a restructuring process and investing 120 million shillings (around 9 million euros) of his own money. By 2003, Kovats owned 100% of the company. In 2004, the private foundation M.U.S.T. acquired 25% of the company, and the majority of votes, for a cost of 20 million euros.
• 2006 remaining 75% of EMCO - purchase price EUR 70.3 million
• 2007 Dörries Scharmann Technologie, Germany - purchase price EUR 64.3 million. Dörries Scharmann is a manufacturer of specialised machine tools for automotive, mechanical, and aerospace engineering. AE&E Nanjing Boiler Co., a Chinese company, specialises in the production of industrial and waste heat boilers. With an annual turnover of US$20 million, the company has been identified as a cost-efficient production site by A-Tec.

Minerals & Metals Division

• 2004 Montanwerke Brixlegg, Austria (Minerals & Metals) – purchase price EUR 9.7 million. The entity is a copper recycling company with a history of more than 500 years.
• 2007 Gindre, France – purchase price EUR 29.5 million. Gindre, a French company located in Lyon, specializes in the production of semi-finished copper products and components for the electrical industry. Established in 2006, the company employed 450 people and generated a revenue of 300 million euros. Its operations spanned five countries, including France, Germany, Great Britain, Spain, and the United States. Through forward integration, Gindre's Minerals & Metals division was further expanded with the Kupferhütte Montanwerke Brixlegg.

Other

• 2008 Voitsberg steam power plant, Austria - purchase price EUR 35 million

In 2006, the Voitsberg lignite-fired power plant was decommissioned and placed up for auction. A-Tec emerged as the victor among the 49 initial bidders, proposing to repurpose the plant to utilize other energy sources in coordination with AE&E.

Failed Takeovers

In 2007, A-Tec sought to bolster the copper sector by acquiring the Belgian copper group Cumerio, in contrast to Norddeutsche Affinerie (NA). Although A-Tec also acquired a stake in NA, the German Federal Cartel Office (Bundeskartellamt) barred the takeover of NA, deeming it to create a dominant position in the oxygen-free continuous cast copper shapes market. This series of events was dubbed the "copper thriller" by the media. By early 2008, A-Tec had sold off its Cumerio shares and, by the summer, relinquished its stake in NA.

Later in the year, A-Tec's attempt to purchase Serbian copper smelter RTB Bor fell through due to the company's failure to pay the full purchase price in time. In the same year, A-Tec moved to acquire the Ugandan copper mine Kilembe, as well as a copper smelter in the country.

Financial market transactions

On November 2, 2005, A-Tec INDUSTRIES AG issued a bond (ISIN AT0000499272) in the amount of EUR 100 million with a 5.75% interest rate, payable upon maturity on November 2, 2010.

The A-Tec share (ISIN AT00000ATEC9) was listed on the Vienna Stock Exchange in December 2006, reaching its highest point of EUR 48 in the summer of 2007. By mid-July 2009, the share had dropped to a value of nearly EUR 9.

A convertible bond (ISIN AT0000A05CS2) with a volume of EUR 180 million was issued on May 3, 2007, with a coupon rate of 2.75%. The bond was due to be repaid in 2014 and included a conversion right, which was valid until April 18, 2014, allowing creditors to convert the bonds into shares at a conversion price of EUR 56.25 per share. In the second half of 2009, A-Tec bought back a portion of the bond, which reduced the outstanding volume to around 92 million euros.

On October 27, 2009, A-Tec Industries issued a convertible bond (ISIN AT0000A0F795) with a nominal value of EUR 110 million and an 8.75% interest rate, maturing in 2014. Creditors were granted the right to convert the bonds into shares of A-Tec stock at a conversion price of EUR 14.76 per share until October 7, 2014.

In June 2010, A-Tec attempted to issue another bond but failed, with no ad hoc announcement informing the public of the failure. As a result, in 2012, the Financial Market Authority fined both Mirko Kovats and Christian Schmidt a total of EUR 130,000.

On October 5, 2010, A-Tec made an ad hoc announcement disclosing major orders with a volume of approximately one billion. However, at the time of the announcement, it had already been reported to the Financial Market Authority that the financing for these orders had not been secured. As a result, in 2012, Mirko Kovats, Christian Schmid and Franz Fehringer were each fined an additional EUR 200,000.

Notes and References

1. Web site: A-Tec verliert Zulassung an Wiener Börse. Der Standard. 2014-02-06. 2014-02-11. German.
2. Web site: Jahresfinanzbericht 2007 . A-TEC Industries . 2008-06-06 . 2012-06-30 . German . PDF .
3. Web site: Halbjahresfinanzbericht 2012 . A-TEC Industries . 2 . 2012-08-31 . 2012-11-03 . German . PDF . dead . https://web.archive.org/web/20140303214209/http://www.a-tecindustries.com/loom_data/files/20/A-TEC_INDUSTRIES_AG_Halbjahresfinanzbericht_2012.pdf . 2014-03-03 .