Back in November, Gores Technology offered to inject roughly 74m euros ($90.6m) in exchange for control of the Paris, France-based company. Pierre Bonelli, the executive chairman of Bull – brought in two years ago to restructure the group – said at the time that Bull’s board had rejected Gores’ offer because the private equity solution was opaque about future strategy and was not backed by Bull’s managers.
The shareholders meeting last week also rejected this option, and instead opted for a recapitalization plan that will see existing holders of the bonds, totaling 204m euros ($249.9m) sacrificing 90% of the bonds’ value. New and existing shareholders have also agreed to subscribe to 44m euros ($53.8m) in new equity, and the French government has agreed to repayment of just 48m euros ($58.7m) of an emergency 490m euros ($583.6m) loan granted last year to save Bull from insolvency.
The approval of the rescue plan means that the European Union Commission is now on a collision course with the French Government, which has broken European Competition laws by bailing out Bull at least twice. Under European Competition laws, companies can only receive state subsidies for restructuring once. Yet Bull received 1.3bn euros ($1.53bn) in restructuring aid from the French government back in 1993, as well as the emergency 490m euros ($583.6m) loan in 2001.
The French Government’s decision to forgive 90% of its controversial 490m euro ($583.6m) loan to Bull has caused deep anger at the Commission, which is now suing the French government for failure to recover the loan. Brussels only approved the loan provided it would be paid back by June. Commission staff is also examining possible illegal subsidies for Electricite de France and France Telecom by the French Government.
Shares in the French company will resume trading in Paris on Friday after bondholders agreed to a change in terms. They were suspended last Wednesday before Bull announced an improved offer for convertible bondholders. Aggrieved bondholders, led by a small investors protection group called Association de Defense des Actionnaires Minoritaires, had threatened to vote against the refinancing.
Yet Bull was reasonably certain to win the vote after shareholder France Telecom SA announced it had sold its package of Bull bonds, equal to 18%, for 9.8m ($12m) to an unnamed investor who had committed to back the restructuring.
This article is based on material originally produced by ComputerWire.
