The board of ARM ASSET-BACKED Securities S.A (the “Company”) held its first board meeting of 2012 on January 11th , below is a statement of the current situation.
The Company entered into a Sale and Purchase Agreement with Insetco plc (“Insetco”) in August 2011.
On 29th August 2011, The Commission de Surveillance du Secteur financier (“CSSF”) decided to refuse to grant a licence to ARM as a regulated securitisation undertaking under the law of 22nd March 2004 on securitisation. This decision had the consequence that under Luxembourg law the Company was then unable to make any payments of any kind without the prior approval of the CSSF who were automatically appointed to the position of Supervisory Commissioner.
The Company proceeded to lodge a “recours gracieux” with the CSSF on 29th September 2011. ARM formally requested the CSSF to revise its decision to refuse ARM a license to conduct business as a regulated securities undertaking under the Luxembourg law. The CSSF never answered to this “recours gracieux”.
In October 2011, the CSSF made an application to the Luxembourg district court, sitting in commercial matters, in which it requested that the court formally acknowledge that the Company is under supervision, the CSSF also requested that an independent third party be appointed in its place as Supervisory Commissioner.
By judgement of the 10th November 2011, the Luxembourg district court, sitting in commercial matters, decided that the protective measures listed in article 28 of the Luxembourg law of 22nd March 2004 on securitisation are applicable to ARM and decided to appoint ERNST & YOUNG, with registered office at 7, rue Gabriel Lippmann, Parc d’Activités Syrdall 2, L-5365 Munsbach, represented by Mr. Jean-Michel Pacaud, as Supervisory Commissioner of ARM. The written authorization of the Supervisory Commissioner is required fr all actions or measures other than protective actions or measures and for the performance of all contracts including the proposed transaction between ARM and Insetco
The Company is currently working with the Supervisory Commissioner.
However, ARM refutes that the protective measures listed in article 28 of the Luxembourg law of 22nd March 2004 on securitisation are applicable to the Company and refutes the appointment of a Supervisory Commissioner. ARM has lodged an appeal before the Court of appeal (Cour d’appel) against the district court’s said judgment of 10th November 2011 to have the decision overturned. This appeal is based on a number of points.
The Company has also brought a petition (recours administratif) before the Luxembourg administrative tribunal (tribunal administratif) to obtain a judicial review of the CSSF’s decision of 29th August 2011 to refuse to grant a licence to ARM as a regulated securitisation.
The commercial appeal and the administrative review are currently ongoing. ARM is represented by and receives advice from the Luxembourg law firm THEWES & REUTER
ARM has in January 2012 after communication with the FSA, Supervisory Commissioner and its legal counsel sought an opinion from Queens Counsel on the issue of the Tranche 9 – 11 funds and the legal status surrounding these funds. ARM awaits the opinion.
The Company held a poll in the autumn of 2011 asking Bond Holders whether or not they would like to see a full offer from Insetco. The process set out in the Sale and Purchase Agreement has not been given full opportunity to complete after the Luxembourg district court appointed Ernst & Young and decided that the agreement between ARM and Insetco is also subject to written approval of the Supervisory commissioner. The Sale and Purchase Agreement formally lapsed on 30th November 2011 and on 27th January 2012 Insetco plc announced the formal lapse and announced the re-listing of their shares on the AIM Exchange, the Company and Insetco continue to cooperate with the aim to possible re-engagement. Since the lapse of the Sale and Purchase Agreement, a small number of other offers have been received by the board, these offers have been under negotiation for a number of weeks and are entering the final stages of being presented to the Company as viable options.
The board has met with the Supervisory Commissioner on several occasions. During a meeting held after the conclusion of the board meeting held on the 11th January, various options for the restructuring of the Company were discussed. The board will now proceed to obtain detailed offers in a format prescribed by the board. It will then evaluate the pros and cons of each, the background of each offerer, the financial strength and modelling of each proposal and above all the strength of the offer for the benefit of the Bond Holders. Once this process is complete a meeting of Bond Holders will be called and Bond Holders will be asked to vote on the proposal(s) put to them. This process will take place under the supervision of Ernst & Young and any decision to be made by the board, including calling a BondHolder’s meeting, will only be deemed valid after the approval by the Supervisory commissioner
The board recognise that this has and continues to be a difficult time for Bond Holders and understands that the above statement still leaves open questions. The board will endeavour to post fortnightly updates as to its progress.
For further information please contact Catalyst Investment Group Limited by e-mail (email@example.com) or by telephone on 0207 367 1234.