An unwelcome IPEX surprise: Böwe Systec files for opening of insolvency proceedings

Ralf Schlozer
May 24, 2010

On May 20, 2010 Böwe Systec AG, one of the three global leading manufacturers of inserting equipment, declared the opening of insolvency proceedings (the German equivalent to chapter 11). The announcement by Böwe Systec came as a bit of a surprise to stock market analysts as orders for the first 4 months in 2010 had increased by 40% over the previous year, although revenues were down considerably in 2008 and 2009. The announcements, which came at IPEX 2010 in Birmingham UK (this year’s largest international graphic arts show) also took Böwe’s staff by surprise.

The opening of the insolvency proceeding was preceded by the bankruptcy of Wanderer Werke AG only a few days before, an investment holding company which held the majority of Böwe Systec’s shares with 50.1%. At that time Böwe stated that the bankruptcy of Wanderer Werke would not have any effect on Böwe.

Böwe Systec AG is currently in the middle of a restructuring process, which kicked off under a new CEO, who was appointed begin of 2009 after very unsatisfactory 2008 results. In the 2009 business year the group’s turnover declined by -13.5% to €367.1 million and the Böwe group reported a loss, although losses decreased to -€25 million from -€60 million in the previous business year.

So far only Böwe Systec AG and its Augsburg location are affected. Böwe Systec is the parent company of the Böwe group, which consists of Böwe Bell + Howell, Böwe Cardtec ,and Lasermax Roll Systems. Böwe Bell + Howell was acquired in 2003 and is mainly active in the North American market with inserting, mail verification, and sorting equipment. Böwe Cardtec is a hardware and software supplier for personalised plastic cards and ID documents. Lasermax Roll Systems was acquired in 2008 for about €40 million and focuses on feeding and finishing equipment mainly for web solutions, but increasingly also for cut sheet printers. The acquisitions contributed to a debt load of €241.6 million on Böwe Systec, despite the sale of the scanner business to Kodak in 2009.

Böwe Systec stated that existing orders will be fulfilled and the regional service organisations will continue operating as usual. Böwe is also trying to gain new orders and is currently exhibiting at IPEX 2010. However much of the future proceedings will depend on the insolvency administrator, which will be appointed this week by the local court in Augsburg. In a press release Oliver Bialowons, CEO of Böwe Systec AG stated: “The aim is to preserve Böwe Systec AG in its entirety and to position it for sustainable, profitable operation once more”.

With a large installed base and competitive products there is little doubt that Böwe Systec’s business will emerge from this insolvency proceeding. It is very likely that the ownership structure of the entire Böwe group will be affected as well. While the offerings of Böwe Bell + Howell are closely aligned with Böwe Systec’s business, the Lasermax Roll Systems subsidy has much more of an independent profile. This includes a focus on a separate line of products as well as an own branding and market approach. At IPEX plenty of Lasermax Roll Systems equipment was found on a variety of booths of vendors like Ricoh, Xerox, DJM, Impika, Océ, Nipson, HP, Screen and in Böwe’s own booth. An especially notable appearance is the PageReady output module and FinishReady controller of HP Indigo line of sheetfed printers, which was developed by Lasermax Roll Systems and to which it provides hardware and control infrastructure.

In the further process of the insolvency proceedings it is likely that all entities will continue to operate, acquire, and fulfil orders. Reducing the debt load through the course of the insolvency will be beneficial to the future of the group companies. Also the bankruptcy of the former majority shareholder should work in Böwe’s favour since the shareholder was very much dependent on dividend payments from Böwe and according to German stock market sources it probably pushed for too high payments in this time of financial crisis.

The Böwe group has around 3,600 employees worldwide. Directly affected so far are only the 600 employees at the Augsburg based factory for inserters. As part of the restructuring a further reduction by 120 employees has been announced already.

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