Corporate News

Report of the Executive Board on the successful operational turnaround, the imminent completion of the restructuring phase and the future of the Alexanderwerk Group

Remscheid, August 24, 2010 – For Jürgen Kullmann, sole member of the Executive Board Alexanderwerk AG, the restructuring phase of the Remscheid-based specialist for the development and production of special machines is coming to a close. Thanks to successful interim financing, the remaining measures for the repositioning of the Group can now be prepared by the planned Annual General Meeting (November4, 2010).

Successful turnaround in earnings
From an operational point of view, the company is obviously already in a phase of organic growth. The situation on the order side is very successful and well above plan, also due to the massive reinforcement in sales and the conclusion of a number of new sales agency contracts. The implementation of the new matrix organization in Remscheid is well on its way and reflects ongoing success.

Insolvency has been filed for the main loss-generating element, the 100% subsidiary of AlexanderSolia Vertriebs GmbH, FoodTec GmbH in Freiberg/N. Hence, monthly “donations” of almost EUR 100,000 in the last 12 months have come to an end. The process of conversion into a smaller assembly company is ongoing in collaboration with the insolvency administrator. This is to be achieved by the end of the year. In that case, it is conceivable that FoodTec GmbH will be acquired again; however, without generating losses anymore.

AlexanderSolia Vertriebs GmbH is now running its own spare parts business and organizes its procurement independently. The conversion and completion of these measures is scheduled to be completed by December 31, 2010. In addition, work is underway on an international joint venture with partners from the Netherlands to significantly strengthen the company's market position. Here, too, new employees in sales and marketing have been taken on board.

Growth funding about to be completed
The operational turnaround and the structural measures also have a positive impact on the Group's comprehensive and fully secured financing. Financing based on the State guarantee will not be pursued any further because its criteria and obstacles are disproportionate to the by now much reduced need for capital. The conversion of the current financing of the three banks (Stadtsparkasse, National-Bank, LBBW) into long-term loans until October 2010 (target date) is currently the subject of discussions and will be advanced in the coming weeks. Likewise, further steps to raise capital will
be carefully examined. The current interim financing was borne and secured by guarantees from the Management Board, the Chairman of the Supervisory Board and a “former shareholder”.

Workforce notices the first signs of the successful repositioning
The cooperation with the workforce and the collaboration with the works council / IG Metall have returned to normal since we paid out almost EUR 1.2 million from our own funds in value adjustments and for severance payments, etc. The Chairman of the Works Council, Uwe Stacklies, will join the Supervisory Board on behalf of the employees from the next Annual General Meeting until the new election in 2011. The founding of AlexanderwerkService GmbH has already proven to be a success. Motivation is high. Internally, new premises have been moved into and the team finds itself as a customer-oriented organization. Sales are doing disproportionately well.

Ad hoc disclosures re section 92(1) of the German Stock Corporations Act (AktG)
As reported ad-hoc today, the company's equity has been temporarily depleted. However, the Executive Board emphasizes that this is also a consequence of the restructuring-indexed depreciation. Jürgen Kullmann explains in this regard: “In this context, I would like to emphasize that, contrary to what was envisaged in the restructuring report, we were able to manage the turnaround entirely on our own. In particular, the radical restructuring of FoodTec has severely affected our equity. Therefore, a few minutes ago, we disseminated a corresponding mandatory report via the corresponding media bundles. Since the Annual General Meeting was planned for the end of October anyway, we are taking up the same date and combining the Annual General Meeting with the Annual General Meeting
pursuant to section 92 of the German Stock Corporation Act (AktG).”

Miscellaneous
The German Federal Financial Supervisory Authority (BaFin) currently monitors Alexanderwerk AG extremely strictly. This is also due to the outstanding attestations for the annual and half-yearly financial statements of 2008 and 2009, which the auditor has linked in turn to the securing of a long-term comprehensive financing concept. At the moment, efforts are being made at full speed to find a solution that is acceptable to all parties involved.

The search for additional joint venture partners is progressing well. Mutual participations and the sale of shares are also interesting suggestions if progress is made for the company.

The Group also announces that talks are currently being held with a view to founding a Soda GmbH in 2011, which will steer the formerly very interesting sales field of soda ash processing into a more professional direction.

A contract has just been signed with a consulting firm for a six-month program to improve operations, reduce procurement costs, optimize products and analyze the value of products.

Factoring via AlexanderSolia Vertriebs GmbH is intended to further relieve the capital requirements. In addition, the market entry options into the consumer business (a “root” of Alexanderwerk AG) are being examined.

Executive Board of Alexanderwerk AG
Jürgen Kullmann