After the pandemic-related losses in the past two years, a financial package of measures is necessary to ensure the necessary investments for the growth of the company and the refinancing of the CHF 100 million bond due in May 2023. The focus is on strengthening the capital base and a downstream renewal of debt financing. As a first step, MCH Group is planning to carry out a further capital increase with subscription rights for all shareholders.
Facts & Figures
- With the capital increases in 2020, MCH Group received CHF 69 million in cash and cash equivalents, and equity increased by CHF 93 million. At that time, the Canton of Basel-Stadt converted CHF 24.2 million of an existing loan of CHF 30 million into equity. Lupa Systems invested CHF 48 million.
- During the two Corona years, MCH Group’s business activities were largely at a standstill for around 20 months. It did manage to survive the pandemic period, but only thanks to the financial resources created in 2020, which had to be used for this purpose. MCH Group expects to have liquid funds of around CHF 100 million at the end of 2022 and will need a minimum of liquid funds of around CHF 50 million for its business activities. In other words, it will not be able to refinance the 100-million bond from its own resources after the two pandemic years.
- In 2020, the two anchor shareholders Canton of Basel-Stadt and Lupa Systems agreed on a so-called “backstop” to support the refinancing of the bond in equal parts if MCH Group is unable to repay it from its own resources.
- At least partial redemption of the bond will only be possible if the capital base is strengthened in advance by means of a capital increase. The current financial plan shows a necessary capital inflow of at least CHF 68 million.
- The Government of the Canton of Basel-Stadt proposes to the Parliament that the Canton of Basel-Stadt participate in the capital increase with a minimum of CHF 27 million and a maximum of CHF 34. The Canton of Basel-Stadt will thus be able to maintain the blocking minority of the public sector in any case. The responsible Parliamentary Committee supports the proposals of the Government.
- Lupa Systems is willing to participate with the same amount and thus, if necessary, to go beyond the maximum investment amount of CHF 75 million envisaged in 2020.
- MCH Group’s business model and strategy are geared to keeping the company together in its present structure and putting it on course for solid growth. This includes strengthening Basel as an internationally important exhibition and congress venue.
- Lupa Systems stands 100% behind the business model and the corporate strategy, which is associated with a clear commitment to Basel as the main location. Lupa Systems’ commitment enables MCH to continue developing while at the same time easing the burden on the canton of Basel-Stadt.
- The involvement of the canton of Basel-Stadt is important if the interests of the location are to continue to be assured. Supposed financial alternatives (loans, repurchase of the exhibition halls, etc.) cannot meet the interests of the canton and the requirements of the company.
- If the canton of Basel-Stadt does not wish to participate in the capital increase, it opts for an exit strategy: MCH Group is then left to the free market, in which the perception of the location’s interests plays at most a subordinate role.
“The Government of Basel-Stadt as well as Lupa Systems have every confidence in the path we are taking.” - Andrea Zappia, Chairman of the Board of Directors