OFFERING MEMORANDUM Global Offering of up to ... - Nordex

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10.8 million). Ekter disputes the claim with respect to its legal basis and amount. The claim is split into an amount of GRD 1,584 million, (representing approximately DM 9.1 million) for lost subsidies and GRD 299.7 million, (representing approximately DM 1.7 million) for commissions lost because of the use of Nordex wind turbines instead of the wind turbines of a certain other manufacturer as initially stipulated. Although they were obliged by the arbitral award to reassign all the rights in the wind power project, ITA asserts that both claims arose because the defendants had taken control of the wind power project fraudulently and had obtained an authorization for the wind power project by fraud. In respect of the damages claim relating to the lost subsidies, ITA alleges that it would have received these subsidies if it had developed the project. Ekter, however, is of the opinion that Greek subsidy law only provides for the granting of subsidies to investors in a project and not to a project developer such as ITA. In respect of the lost commissions, ITA argues that it would have been paid by the other wind turbine manufacturer, if its wind turbines had been erected instead of Nordex wind turbines, as is now envisaged. In addition, ITA bases its claim for damages, inter alia, on alleged criminal conduct by members of the board of Ekter. However, the department of the state prosecutor of Athens has rejected criminal proceedings initiated by ITA against these board members. In a second action, ITA claims damages in an aggregate amount of GRD 3,883.7 million (approximately DM 22.3 million) from seven defendants, including Ekter and Nordex Energy GmbH, as joint debtors. A proportion of the damages claimed (GRD 1,883.7 million) covers the same claims as the first action. With respect to the claim of GRD 1,883.7 million, ITA asserts that the defendants had moved ahead with the project despite the arbitral award and ITA thereby suffered a loss of commissions and profits that it could otherwise have expected to have received for performance of the project. The defendants are of the opinion that the arbitral award in respect of the assignment of the authorization to erect wind turbines in particular is unenforceable and Ekter may therefore continue with the project. Furthermore, ITA claims a further GRD 2 billion (approximately DM 11.5 million), asserting that the defendants had sought to obtain an advantage by way of unfair competition by erecting their wind turbines. ITA has not yet substantiated the damage with respect to the amount of GRD 2 billion. However, no Nordex wind turbines have been erected. In a provisional injunction proceeding, ITA tried to prevent Ekter as well as four other defendants from beginning construction work on the site in Tourla. However, ITA’s motion was dismissed by the district court of Chalkida, Greece, in a court order dated September 13, 2000. The court stated that Ekter had no other obligation than to pay to ITA the contractual compensation and to erect wind turbines of a certain manufacturer. Furthermore, the authorization to erect wind turbines, which was addressed to Ekter, was not assignable. Meanwhile, Ekter itself has brought claims for damages of GRD 299.985 million (approximately DM 1.7 million) against ITA, asserting that ITA unjustly obtained the arbitral award by deceiving the arbitrator in Athens with misstatements and by inducing the witnesses to give misstatements. The damages claimed by Ekter relate to the damage to its reputation. In the meantime, the conflicts described above have as of March 27, 2001 been fully resolved pursuant to an out-of-court settlement between (i) Nordex Energy GmbH and Ekter and (ii) ITA and other companies contractually related to ITA to which certain claims had been transferred. The out-of-court settlement was validly entered into, however, in order to ensure its continued effectiveness under Greek law, it needs to be registered with the Greek tax authorities. This can be effected by Ekter and will be done shortly. In this settlement, Nordex Energy GmbH has agreed to make a compensatory payment of a mid-seven-digit million Deutsche Mark amount to ITA and the companies that are contractually related to ITA, which has already partly been paid. This compensatory payment is in line with the amount which the Company calculated as representing the potential risk involved in this conflict. Ekter also agreed to withdraw it lawsuit against ITA. In return, ITA and the companies that are contractually related to it have agreed, with Ekter and Nordex Energy GmbH, to waive their rights under the arbitral award of May 31, 2000 and all claims under the contract dated October 23, 1997 between Ekter and ITA. ITA has also agreed to withdraw the pending lawsuits, and the formal withdrawal of the lawsuits has been initiated. Finally, ITA and the companies contractually related to it have agreed to recognize Ekter as being solely entitled to the Tourla wind energy project and not to assert any claims in connection with the project in the future. 62
Before construction of the wind park can begin, the Greek authorities must set a new deadline for the erection of the park, which was interrupted by the lawsuits. The Company believes that this decision will be made in Ekter’s favor. Should this not be the case, and should Ekter be hindered in continuing the wind energy project, the Danish acquirer could assert claims for millions of Deutsche Marks in damages for non-performance, particularly with respect to consequential damages, against Nordex Energy GmbH. However, the Company believes that any such claims would be exaggerated, because, in the Company’s opinion, the contract with the Danish acquirer excludes potential consequential losses. Litigation with Wehrle-Werk AG Nordex Automation GmbH is currently involved in an out-of-court dispute with Wehrle-Werk AG (‘‘Wehrle’’), Emmendingen, Germany. This dispute relates to a contract which was concluded by Babcock Prozeßautomation GmbH with Wehrle in 1999 concerning the planning, delivery, disassembly and assembly of the electrical engineering and control technology of a furnace. This contract predates the spin off by Babcock Prozeßautomation GmbH of its ‘‘non-wind activities’’ (see ‘‘ Relationships with Principal Shareholders, the Babcock Borsig Group and the Pedersen Family’’). Nordex Automation GmbH demands final payment under this contract together with payment for additional services performed. Wehrle demands that Nordex Automation GmbH pay a contractual penalty for delay as well as reimbursement for costs for repairing defects itself. The Company believes that if this dispute should be taken to court, and if the court were to accept Wehrle’s argument, then there is a risk that Nordex Automation GmbH would have to pay up to DM 510,000 to Wehrle, irrespective of its own claim amounting to DM 306,258, as well as the costs of litigation. Litigation with Gothaer Versicherungsbank VVAG Gothaer Versicherungsbank has made an out-of-court claim against Nordex Energy GmbH for the reimbursement of insurance payments totaling DM 142,488.83 made by Gothaer Versicherung to its policyholder, under a business interruption insurance policy, for damage to a wind turbine allegedly due to Nordex Energy GmbH’s negligence in repairing a defect. Nordex Energy GmbH disputes that it acted negligently, and refers to a provision in the contract excluding liability. Gothaer Versicherungsbank has indicated that it believes this provision is invalid. Disputes Resulting from Warranties In the course of the Nordex Group’s ongoing business activities, warranty claims are made against the Company for defects in wind turbines. Depending on the type of defect claimed, the number of turbines affected and the period for which these claims are asserted (provided that the defects are covered by the warranty) some of the Company’s customers assert that they have substantial claims against the Company. Some of the claims may prove to be unsubstantiated, and some will be settled by repair work conducted by the Company, as provided for in the contracts. The principal warranty claims currently being made against Nordex Group are set out below. The Company believes that these could result in litigation. Dispute with Energiekontor Windkraft GmbH Nordex Energy GmbH constructed three wind farms with a total of 50 wind turbines for three limited partnerships, for which Energiekontor EK GmbH had arranged the provision of the capital, and which are managed by Energiekontor Windkraft GmbH (together ‘‘Energiekontor’’). In an out-of-court dispute, Energiekontor asserts that some of the wind turbines supplied do not meet contractually guaranteed qualities, which will, or could, result, inter alia, in reduced reliability of individual turbines. To the extent Nordex Energy GmbH accepts the validity of these assertions, it has been undertaking, and is continuing with, improvement and optimization work on the affected wind turbines. In the Company’s opinion, further potentially more far-reaching, substantial claims presented thus far by Energiekontor are not sufficiently substantiated. 63
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OFFERING MEMORANDUM Oberhausen, Ger
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Forward-looking Information This Of
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account of a QIB, whom the seller h
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Nordex AG Oberhausen, Germany Offer
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Table of Contents Notice to New Ham
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Financial Information. . . . . . .
Page 13 and 14:
Summary of the Offering Memorandum
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Management Board of Nordex AG and t
Page 17 and 18: Selected Financial Data of the Nord
Page 19 and 20: Shareholders. In each case, the cos
Page 21 and 22: Code - will be held under a separat
Page 23 and 24: Capitalization The following table
Page 25 and 26: organizational structures to meet t
Page 27 and 28: condition, results of operations an
Page 29 and 30: Risks Inherent in the Market and Co
Page 31 and 32: In addition, there is a risk that p
Page 33 and 34: Shareholders’ Meeting of Nordex A
Page 35 and 36: Nordex AG believes that generating
Page 37 and 38: The US provides federal support for
Page 39 and 40: Business Introduction and Overview
Page 41 and 42: manufacturers, customers and suppli
Page 43 and 44: The following table illustrates the
Page 45 and 46: According to the provisional figure
Page 47 and 48: Vestas Wind Systems A/S and Bonus E
Page 49 and 50: Strategy Nordex’s overall strateg
Page 51 and 52: The following figure illustrates th
Page 53 and 54: due to their various sizes and nomi
Page 55 and 56: The maximum weekly production capac
Page 57 and 58: The Company’s marketing is mainly
Page 59 and 60: total value of its requirement for
Page 61 and 62: Intellectual Property Rights Patent
Page 63 and 64: Since it ceased being a member of t
Page 65 and 66: The following table provides an ove
Page 67: accept and pay for the rotor blades
Page 71 and 72: Relationships with Principal Shareh
Page 73 and 74: Agreements with Associated Companie
Page 75 and 76: interests it held with a total nomi
Page 77 and 78: underwriting syndicate lead-managed
Page 79 and 80: Earnings per Share The following ta
Page 81 and 82: Auditor for the Subsidiaries The fi
Page 83 and 84: Capital stock: EUR 25 thousand Rese
Page 85 and 86: Executive Bodies of the Company, Em
Page 87 and 88: The Company has not granted any loa
Page 89 and 90: Automotive-Gruppe were, from 1993,
Page 91 and 92: two comprises the managing director
Page 93 and 94: Management’s Discussion and Analy
Page 95 and 96: Comparison of Fiscal Years 1999/200
Page 97 and 98: was due primarily to the Company in
Page 99 and 100: In total, the average pro forma inc
Page 101 and 102: EUR 3.40 million as of September 30
Page 103 and 104: with terms of between two and five
Page 105 and 106: Liquidity Cash flow from operations
Page 107 and 108: corporation income tax a special ta
Page 109 and 110: or a refund of the amount by which
Page 111 and 112: The above-mentioned tax liability c
Page 113 and 114: Financial information (Combined) Pr
Page 115 and 116: Assets (Combined) pro forma CONSOLI
Page 117 and 118: (Combined) pro forma CONSOLIDATED I
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(Combined) pro forma STATEMENTS OF
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were eliminated from net incomes an
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In the years under review, the cons
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Since Taifun AG will not commence w
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The calculation of imputed taxes, t
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(5.2) Inventories 9-30-2000 E13,903
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(5.6) Equity 9-30-2000 E16,013,985.
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(5.10) Deferred income 9-30-2000 E1
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(6.7) Amortization/depreciation 199
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A detailed breakdown of income taxe
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Primary segment report The Wind Ene
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F-29 (Combined) fixed-asset analysi
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F-31 (Combined) fixed-asset analysi
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alances (receivables, payables, inc
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MANAGEMENT REPORT FOR THE ABBREVIAT
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ANNUAL FINANCIAL STATEMENTS FOR THE
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Group affiliation TAIFUN AG as well
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Assets Pro forma CONSOLIDATED BALAN
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Pro forma CONSOLIDATED INCOME STATE
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Pro forma STATEMENT OF CHANGES IN E
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The restatements made to reconcile
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(3) Consolidation procedures Accord
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(5.2) Inventories 12-31-2000 E 38,0
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(5.7) Future payables under l/t con
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(6.5) Other operating expenses Firs
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Primary segment report The Wind Ene
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F-59 Combined fixed asset analysis
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INDEPENDENT AUDITOR’S CERTIFICATE
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Owing to the accounting system havi
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Research and development Certificat
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ANNUAL FINANCIAL STATEMENTS FOR THE
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ANNUAL ACCOUNTS FOR THE FISCAL YEAR
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(6) Liabilities Remaining term 1 ye
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Shareholdings Interest held Equity
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AUDITOR’S OPINION We audited the
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Recent Developments and Outlook Dur
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Glossary Alternative energy sources
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Medium voltage A type of voltage. T
Page 195 and 196:
Stall-regulated wind turbine Stall-
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On the basis of the above Company R
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SUMMARY OF CERTAIN DIFFERENCES AMON
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the accrued interest of the present
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ecognise foreign currency gain or l
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UNDERWRITING AND SALE Dresdner Klei
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OFFERING MEMORANDUM Global Offering of up to ... - Nordex

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