Date: 28.09.2022

Meeting of creditors approves reorganization of the company, which is a major supplier of components for critical infrastructure in the Czech nuclear power industry

On Tuesday, 27 September 2022, a meeting of creditors approved the reorganisation plan of MICo, a traditional manufacturer of heat exchangers, condensers, pressure vessels for nuclear and conventional power, and other industries based in Trebic. The reorganisation plan provides for the preservation and further development of the company in both of its manufacturing plants. As part of the reorganisation plan, TURNIKA SPV, which is wholly owned by the CE Industries holding company of Czech entrepreneur Jaroslav Strnad, becomes the investor and owner.

MICo has fallen into insolvency as a result of loss-making projects, failed investments outside the core business, lack of necessary corporate processes, e.g. in planning and budgeting for contracts, and lack of preparedness and capital in dealing with large foreign customers. The rising prices of inputs (iron) and complications in the execution of orders in the conditions of the COVID-19 pandemic also played a role. A team led by experienced crisis manager Petr Karásek, known for example from the restart project of TATRA TRUCKS, ESSA Czech and others, joined the company shortly before the court declared insolvency in order to put its management in order, prepare it for the entry of a strategic investor and a new owner, and at the same time carry out basic operational restructuring. Constelius represented the debtor in the insolvency proceedings and participated in the preparation of the reorganisation plan.

Under the leadership of Petr Karásek, an analysis of pending contracts and the possibility of their completion was carried out. At the same time, an analysis of business risks was carried out, which led to the successful renegotiation of the terms of some important contracts, both with customers and suppliers. Crucially for the company's future, it produces high quality and competitive products that are currently in demand, and demand can be expected to grow in the future given the company's current assumption of a return to nuclear power. MICo's activities can also be considered as an important supplier to the critical infrastructure companies of the Czech state, given their special importance for the maintenance of nuclear facilities. Petr Karásek says: "The company's greatest asset is its team of around 150 experienced technicians and workers who have kept production running at full capacity even during the company's crisis. The entry of a strong and experienced investor means a new perspective and motivation for them."

The reorganisation envisages that all development, design and production activities as well as jobs will be maintained. The investor, which is the CE Industries holding company owned by Czech entrepreneur Jaroslav Strnad through the special purpose vehicle TURNIKA SPV a.s., will provide MICo with the necessary capital as well as management and business skills. Adam Šotek, Chairman of the Board of Directors of CE Industries, says: "The energy sector is a key sector of our holding, alongside recycling and railways. MICo represents a strategic investment for CE Industries that expands our capabilities in both nuclear and conventional energy."

Adam Šotek further explains the investor's strategy. With this synergy, the customers will receive a comprehensive service from the production of the apparatus to the assembly itself, including comprehensive engineering. The advantage is that the customer does not have two suppliers, but only one for both production and assembly. Future warranty solutions and project control can then be an essential parameter for the customer. For both companies this is then a competitive advantage over other suppliers during the tendering process. So far, it appears that such a combination will be unique in Central Europe, and by expanding the product portfolio to include MICo products, MICo's cooperation with Chemcomex will gain a competitive advantage in the customer's perception."

The new CEO of MICo as of September 2022 is Petr Litvan, a graduate in nuclear power engineering from the Czech Technical University in Prague with broad experience in the nuclear power industry as well as management in renowned multinational companies such as Apple and HP. Petr Litvan will gradually take over the management of the company from a team of interim managers led by Petr Karasek, whose tenure will end in September. Petr Litvan says: "The company has been cleared of debt and is starting with a clean slate. It needs to win new orders, produce and deliver them on time and in good quality, improve its liquidity and take advantage of the growth potential in the current renaissance of nuclear power in the Czech Republic and Europe."

About MICo

MICo, spol. s r.o. was founded in 1993 as a service organization operating mainly for the Dukovany Nuclear Power Plant. In 1998 it started its own production in Hrotovice and in 2011 the production capacity was expanded to Kramolin. The company focuses primarily on the design and manufacture of heat exchangers, condensers, pressure vessels, tanks, steel structures, process parts for nuclear and conventional power generation, other industries and seals for special applications. Approximately two-thirds of the deliveries go to the nuclear power industry and the remaining third to the conventional power industry. In 2019, the last year that MICo published its results by default, sales were $298 million. The company's profit was just under CZK 3 million.