HETA: In any scenario, the liabilities of the Province of Carinthia and the KLH come into effect

• Haircut does not reduce the liabilities
• Creditors are willing to present an offer structure to the decision makers face-to-face

Wien 11.04.2016.A group of creditors, who in total hold or control more than EUR 5 billion of gilt-edged debt securities of the HETA ASSET RESOLUTION AG (“HETA”) covered by the failed tender offer, does not see the bail-in tool decreed by the FMA as a further resolution measure concerning HETA as a disadvantage for their position. The creditors have the possibility of asserting their claims – legally reduced only with respect to HETA – in its entirety against the Province of Carinthia and the
Kärntner Landes- und Hypothekenbank-Holding (“KLH”). The assumptions for the settlement of HETA, which the decree is based on, will be examined in detail within the next days. Nevertheless, the creditors are going to exhaust all legal possibilities to oppose the haircut, and indicate a presumption that it will not be acknowledged by German and other foreign courts in any circumstance.

In any scenario, the liabilities of the Province of Carinthia and the KLH come into effect

The Austrian Federal Government confirmed in a statement to the Constitutional Court of December 2015 that the liabilities already came into effect with the moratorium of March 1, 2015. That is all the more so after the imposition of the haircut. Neither the Austrian Federal Government, the Austrian Constitutional Court (at the repeal of the HaaSanG), the financial market authority (FMA), the National Bank of Austria (OeNB) nor the Griss commission have ever called the continuance of the liabilities into question.

The mere fact that Carinthian decision-makers make public statements that the statutory guarantees could be invalid/void have negative effects on the refinancing costs for the states, affiliated companies and Austrian banks. Because it is the complete confidence of the financial markets in the validity of such liabilities/guarantees that opens up attractive refinancing opportunities and thus benefits the taxpayer.

Haircut does not reduce liabilities/guarantees

That there would be such a haircut sooner or later was foreseeable. It would also have happened
in case of an acceptance of the failed tender offer of January 21 2016. The fact is: the consequences of this haircut ultimately primarily affect the Province of Carinthia, which is liable in conjunction with the KLH for the entire loss of HETA towards the creditors, and not the HETA creditors. Because the haircut only reduces the liabilities of HETA but not those of the Province ofCarinthia or the KLH.

The consequences of the bail-in not only affect the Province of Carinthia but ultimately Austria as a
financial center overall. Also, in particular all other states as well as public and other companies
which re-finance on the capital market.

Creditors are willing to present an offer structure to the decision makers face-to-face

The creditors were and are still ready to reach an acceptable solution for all involved by means of constructive negotiations with Province of Carinthia and the Republic of Austria and to present an offer structure face-to-face. This requires sitting down at a negotiating table. An out-of-court solution is still possible, and can only be in the interest of all involved – the Province of Carinthia, the Republic of Austria, the other states – and not least the Austrian taxpayer and the Republic of Austria as a financial center.

Rückfragehinweis:

Ecker & Partner
Nicole Bäck-Knapp

E-Mail: n.baeck@eup.at
Tel.: +43159932-47
Mobil: +4369915909094

Rosam Change Communication
Silvia Grünberger

Email: silvia.gruenberger@rosam.at
Tel.: +4319042142 – 225
Mobil: +4367688066225

Greenberg Advisory
Georg Baldauf

Email: gb@greenberg-advisory.com
Telefon: +4312051160-1062
Mobil: +436503015888