On April 26, 2006, the Company signed an agreement to increase its investment in Nanjing Teksid Aluminum Foundry Co, Ltd. ("NTAF"), which operates an aluminum foundry based in Nanjing, China. Local government approved the investment in July 2006. Based on the agreement, the Company will invest an additional US$3,094 thousand in NTAF registered capital. This investment will increase the Company's equity rights to approximately 51%. Simultaneously, Simest, an Italian state owned agency that provides specific financial support for direct investment abroad to Italian companies, will invest an additional US$2,800 thousand, which represents a 19% equity share. As part of the agreement, Simest will provide the Company with the related voting rights, which will increase the Company's total voting rights in NTAF to approximately 70%.
FIAT indemnification
On July 11, 2006, the Company concluded its on-going negotiations and signed a settlement agreement with Teksid S.p.A., which is controlled by FIAT, with respect to outstanding claims pursuant to the original purchase agreement dated August 2, 2002. The settlement agreement stipulates that Teksid S.p.A. will pay the Company up to EUR30.0 million in multiple installments. As of August 29, 2006, Teksid S.p.A. had paid the Company EUR9.5 million. Pursuant to the terms of the settlement agreement, the Company is entitled to receive an additional EUR1.0 million on December 31, 2006, a payment of EUR1.5 million on December 31, 29 Ago. (subject to substantial completion of certain improvements to machinery and certain plants) - and a payment of EUR18.0 million upon release of FIAT S.p.A. from its guaranty provided in favor of a subsidiary of the Company.
Factoring
On August 25, 2006, the Company entered into an Account Purchase Agreement ("APA") pursuant to which a third-party may purchase selected receivables from one of the Company's U.S. subsidiaries, which may factor on a recourse and non-recourse basis. The aggregate limit under the APA is US$20 million.
Covenants Compliance
The Company was in full compliance with the financial covenants of its Senior Credit Agreement and with its Second Lien Agreement with respect to the period ended June 30, 2006.
Results for the six-months period ended June 30th 2006 and 2005, included herein, are unaudited and have been presented in accordance with U.S. GAAP.
Further comments on the second quarter and first half of 2006 earnings will be delivered by Messrs. Jake Hirsch and Jon Smith during the bondholders and analyst conference call to be held on August 31st, 2006, at 15:00 pm, Central European Time, 14:00 pm London Time, 9:00 am Eastern Time. Registration of the Conference Call will be available on September 1st, 2006 at 15:00 pm, Central European Time, 14:30 pm London Time, 9:30 am Eastern Time.
Any interested person may join the conference call by using the dial-in numbers set forth below.
Dial-in +39-071-2861848
About Teksid Aluminum
Teksid Aluminum is a leading independent manufacturer of aluminum engine castings for the automotive industry. Our principal products are cylinder heads, engine blocks, transmission housings and suspension components. We operate 15 manufacturing facilities in Europe, North America, South America and Asia. Information about Teksid Aluminum is available on our website at www.teksidaluminum.com.
Until September 2002, Teksid Aluminum was a division of Teksid S.p.A., which was owned by Fiat. Through a series of transactions completed between September 30, 2002 and November 22, 2002, Teksid S.p.A. sold its aluminum foundry business to a consortium of investment funds led by equity investors that include affiliates of each Questor Management Company, LLC, JPMorgan Partners, Private Equity Partners SGR SpA and AIG Global Investment Corp. As a result of the sale, Teksid Aluminum is owned by its equity investors through TK Aluminum Ltd., a Bermuda holding company.
For further information please call
Massimiliano Chiara, Finance Director, at +39-011-979-4889
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with U.S. GAAP. Furthermore, Adjusted EBITDA should not be considered as an alternative to net income (loss) or any other performance measures derived in accordance with U.S. GAAP, or to cash flows from operating activities as a measure of liquidity.
The following is a reconciliation of Net Loss to EBITDA and to Adjusted EBITDA:
(in thousands of Three-months ended June 30 Six-months ended June 30
euro) 2006 2005 2006 2005
as restated as restated
Net loss (24.487) (2.263) (43.770) (10.746)
Depreciation and 14.274 15.926 13.922 31.594
amortization
Income tax (benefit) 737 5.602 (2.952) 7.401
expense
Interest expense 15.041 12.621 11.880 24.318
(income), net
EBITDA 5.205 31.786 3.927 52.567
Equity in (earnings) 144 54 70 250
loss of affiliated
companies, net
Foreign exchanges 8.233 (15.140) 9.208 (19.770)
losses (gains), net
Other expense (386) 1.192 (513) 431
(income), net
Adjustments to
EBITDA:
Restructuring / 3.342 2.050 4.774 3.226
Severance / Early
retirement expenses
SEC Filing, SOA and 125 2.402 299 2.593
Exchange Offer fees
Other expenses and - 730 - 730
non-recurring items
Fees payable to 625 625 1250 1250
affiliates of the
investors
Change in accounting - (1.402) - (2.683)
treatment of
synthetic lease (a)
Change in accounting 65 - 188 -
principle of
Stock-based
compensation (SFAS
123R) (b)
Adjusted EBITDA 17.353 22.297 24.408 38.594
(a) As part of the amendments in connection with the Company's refinancing package, the change in accounting principle related to the synthetic lease no longer applies as an adjustment to EBITDA.
(b) In association with changed accounting treatment of stock-based compensation expense (SFAS 123R adopted January 1, 2006), for covenant compliance purposes, the Company should apply, to the relevant financial measures, the same accounting principles existing at the closing date, September 30th, 2002.
(CONTINUA)
