Dutch trading and brokerage firm Van der Moolen on Monday sought creditor protection and permission to suspend payments from an Amsterdam court due to what it called ‘a weak liquidity’ position. The company also released second half results, earlier than originally planned, which showed a first-half loss of €8.7m. Van der Moolen shares were suspended at the open.
The statement comes just weeks after the firm was forced to transfer executive powers to its supervisory board following the resignation of executive board chairman Richard den Drijver in mid July. Former CEO Hans Kroon, nominated to the board in May, meanwhile, declined to take up the board position “for personal reasons”.
According to Reuters, the brokerage posted a net loss in May on low trading volumes and a lack of market liquidity. At that point the firm also declined to forecast results for the year.
Last week, Dutch newspapers were full of reports that mass redundancies and bonus cuts were being implemented at the firm.
Amsterdam – Van der Moolen Holding N.V. (international trading and brokerage firm) requested today surséance and published its first half year 2009 results earlier than anticipated. Van der Moolen Holding N.V. (“Van der Moolen”) requested this morning with the Amsterdam court a suspension of payments. The request is solely related to Van der Moolen (the parent company). No surséance has been requested for any of Van der Moolen’s subsidiaries.
The most important reason to request a suspension of payments is due to Van der Moolen’s very weak liquidity position. After taking over from previous management, Van der Moolen’s current management concluded Van der Moolen would soon be unable to satisfy its obligations. Management is looking into the possibility of continuing Van der Moolen as a smaller company. Serious consideration is being given to selling various parts of the company. These developments have resulted in Van der Moolen’s management to call for an extraordinary shareholders’ meeting and to publish its half year results today instead of on the previously announced date of 13 August 2009.
The extraordinary shareholders’ meeting is expected to take place in the second half of September 2009. The most important causes for the weak liquidity position are: * continuing disappointing results: Revenues in the first half year 2009 were 73% lower than the first half year 2008. It should be noted that dividend arbitrage revenues under the agreement with GSFS Asset Management BV (GSFS) of approximately €40 million were recognised in the first half year 2008. Such revenues were impaired at the end of 2008; * high cost structure: Despite lower operating expenses (1H09 were 45% lower than 1H08) costs were higher, in part due to the recent move.
Van der Moolen recently moved from its two locations in Amsterdam to Schiphol This move resulted in additional costs and expenditures; * treasury share purchases of approximately €30 million in 2008 whose impact on liquidity, in retrospect, were too severe. Management is currently evaluating the future prospects of the company’s various activities and segments.
Van der Moolen can not quantify the results of this evaluation nor the surséance of the parent company. Accordingly, management decided to prepare the accompanying condensed financial information of the group (including Van der Moolen) assuming the group will continue as a going concern.
Impairments have not been reflected in such financial information because it can not be determined which, if any, assets should be impaired and what the extent of any such impairment may be. Management emphasizes that it is seriously considering significant asset impairments. The financial information is presented beginning on page 4 of this press release. Management points out that the first half year 2009 results should be considered in light of the aforementioned circumstances and that the going concern assumption – given the surséance that has been requested – is not definite.
Important developments: * sale of 50% interest in Gekko Global Markets ltd (formerly VDM Global Markets ltd) to joint venture partner SYCAP. A ‘letter of intent’ was signed on the evening of Friday 7 August with the condition that permission would be granted by the bewindvoerder to be named under the surséance. The upcoming sale of the interest in Gekko Global Markets is expected to have a very limited contribution to the company’s results; * the agreement with GSFS has recently been terminated. As a result, Van der Moolen will no longer carry out trading activities (dividend arbitrage) together with GSFS. The impact on the results is nil as possible revenues have been completely impaired. In anticipation of the upcoming extraordinary shareholders’ meeting, Van der Moolen can provide the following information over relevant events in the period. *
Mr. Kroon announced his intention not to accept a position on Van der Moolen’s Management Board on 15 July 2009. Mr. Kroon received no termination benefits or any payments of a similar nature; * Mr. Den Drijver resigned as the sole member of Van der Moolen’s Management Board on 16 July 2009. It was agreed that Mr. Den Drijver would receive no bonus over 2009 and that he would not request a termination benefit. Mr. Den Drijver will remain connected to the company as an advisor for a maximum of 12 months; * the departure of the sole member of the Management Board on 16 July 2009, resulted in an absence of management.
Van der Moolen made its name as a US specialist marketmaker, but sold its New York-based arm to Lehman in 2007 after its traditional trading services failed to keep up with the explosive growth of automated trading, seeing the company post ever steeper losses.
Under its restructuring plan, the company focused on growing market share in Europe by adapting itself to an electronic screen model. By May 2008, the strategy had reaped results, turning the company profitable and establishing Van der Moolen as a chief provider of liquidity to the European market space, according to chairman Richard den Drijver.
Since that time, the company has taken ever bolder steps into the algorithmic and automated trading sphere. It became a part-owner of Europe’s multilateral trading facility Chi-X when it launched in March 2007.
Related links:
Lehman poised to buy Van der Moolen arm - FT
UPDATE 2-Van der Moolen asks court for creditor protection - Reuters
The dash to flash – FT