RCS - Maruho Deutschland - Extraordinary General Meeting on 7 April 2022
31/03/2022 13:15
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RNS Number : 7837G Maruho Deutschland GmbH 31 March 2022
Maruho Deutschland GmbH / Key word(s): Statement/Corporate Action
Maruho Deutschland GmbH: Statement of Maruho Deutschland GmbH on the proposed
capital measures in the context of the Extraordinary General Meeting on 7
April 2022
31.03.2022
The issuer is solely responsible for the content of this announcement.
Open letter to our fellow shareholders of Biofrontera AG, Leverkusen, Germany
Statement of Maruho Deutschland GmbH on the proposed capital measures in
the context of the Extraordinary General Meeting on 7 April 2022
Leverkusen, March 31, 2022
Dear fellow shareholders of Biofrontera AG,
As Managing Director of Maruho Deutschland GmbH ("Maruho"), I would like to
address you with a statement on the proposed capital measures and rumors of
alleged voting agreements between shareholders.
Maruho is one of the two major shareholders of Biofrontera AG ("Biofrontera")
and has held an interest stake of just under 24 % in the company for years.
Another major shareholder is a corporate network controlled by Mr. Wilhelm K.
T. Zours around Deutsche Balaton AG ("Balaton"), which together hold an
interest of just under 30 % in Biofrontera. Mr. Zours is Chairman of the
Supervisory Board of Deutsche Balaton AG. Maruho has been pursuing a long-term
strategic interest in a research and development collaboration with
Biofrontera for years. Maruho does not have the intention to exercise control
over, or even launch a public takeover offer for, Biofrontera.
To the contrast, Balaton is an activist financial investor with no strategic
interest in Biofrontera. Balaton exclusively pursues financial interests. For
years, Balaton has been piling numerous lawsuits on Biofrontera. Biofrontera's
management had to spend considerable capacities and costs defending against
these lawsuits and could therefore not use these resources for the company's
daily business. In addition to personal accusations against members of the
Management Board and Supervisory Board, Balaton's legal challenges have also
blocked the capital measures proposed by Biofrontera's management. So far, not
a single one of these lawsuits has held up in court.
On 19 November last year, after months of settlement negotiations, Biofrontera
and Balaton agreed to settle the legal disputes in a mediation agreement. To
ensure that Biofrontera's Supervisory Board is as balanced and as neutral as
possible, Maruho also participated in the mediation agreement and on a
one-time basis agreed to vote for the Supervisory Board members selected by
the mediation participants and proposed to the 2021 Annual General Meeting.
Prof. Dr. Ruhwedel has already resigned from her position after a short period
of time, which Maruho regrets very much.
However, the intended reconciliation has failed: The conclusion of the
mediation agreement was supposed to allow the management to concentrate on the
daily business again. In the meantime, however, we have heard that Balaton has
filed another lawsuit against Biofrontera immediately after the Annual General
Meeting 2021. The subject of this lawsuit is the IPO of Biofrontera Inc. in
the U.S. Balaton has thus disregarded the objective of the mediation just a
few days after the conclusion of the mediation agreement.
The Chairman of the Supervisory Board is apparently subject to a serious,
permanent conflict of interest: The Supervisory Board, which was newly
elected on 14 December 2021, has elected Mr. Zours as Chairman. Mr. Zours, who
controls Balaton as the largest shareholder, is apparently pursuing the
financial interests of Balaton to a considerable extent in his function as
Chairman of the Supervisory Board. Mr. Zours is obviously trying to save the
investment made by Balaton by all means and at the expense of the company and
the other shareholders. He controls Balaton and thus a company that has filed
another lawsuit against Biofrontera immediately after the conclusion of the
mediation agreement. In our view, there appears to be a serious, ongoing
conflict of interest that urgently needs to be investigated.
Now, presumably on the initiative of the Supervisory Board chaired by Mr.
Zours, Biofrontera proposes to resolve an authorization to issue
warrant/convertible bonds and an ordinary capital increase at an Extraordinary
General Meeting on 7 April 2022.
The proposed capital measures are not necessary and are neither in the
interest of Biofrontera nor in the interest of all shareholders, but in the
interest of Balaton:
- No voting agreement between Maruho and Balaton
First of all, we would like to clarify: There is no agreement whatsoever
between Maruho and Balaton on the agenda items of the extraordinary general
meeting convened for 7 April 2022. It is by no means certain that the Annual
General Meeting will vote in favor of the capital measures with the required
majority. Maruho will vote against the capital measures. Whether the capital
measures are resolved is therefore in your hands.
- No need for capital measures and expensive extraordinary shareholders'
meeting
Maruho sees no need for the proposed capital measures as long as Biofrontera
has sufficient funds that are not needed for business operations. Biofrontera
is in possession of such funds, as the company holds approximately 8 million
liquid shares in Biofrontera Inc. Biofrontera can sell all or part of these
shares in order to obtain the required liquidity at any point in time. In
November 2021, the previous Supervisory Board had already approved the sale of
at least some of these shares. The new Supervisory Board under Mr. Zours has
revoked this approval. This is surprising, as a sale of the shares could be
implemented significantly faster and cheaper than resolving and implementing
the proposed capital measures at the convened Extraordinary General Meeting.
- Timing of capital increase is extremely inconvenient
The timing for a capital increase is extremely inconvenient. The share price
is currently EUR 1.28 and has dropped significantly in the last months.
Even if the capital increase can be implemented, Biofrontera would probably
end up with only little new capital. All in all, the planned capital measures
would be a pretty bad deal for all parties involved - except for Balaton.
- Proposed capital measures serve the interests of Balaton
It is obvious that Balaton in particular will benefit from the intended
capital measures. Balaton is apparently trying to reduce the average entry
price of its investment through cheap capital measures at the expense of the
rest of us shareholders. GSC Research, an independent analyst firm focusing on
small and mid caps from the German-speaking region, has published an AGM
report on the internet for the AGM of Deutsche Balaton AG of August 2021
(http://www.gsc-research.de/gsc/research/hv_berichte/detailansicht/index.html?tx_mfcgsc_unternehmen%5Buid%5D=316&tx_ttnews%5Btt_news%5D=79563&cHash=2b6a72c993
(http://www.gsc-research.de/gsc/research/hv_berichte/detailansicht/index.html?tx_mfcgsc_unternehmen%5Buid%5D=316&tx_ttnews%5Btt_news%5D=79563&cHash=2b6a72c993)
).
According to this report, Mr. Zours considers the investment in Biofrontera as
"probably the worst investment of Deutsche Balaton AG". Mr. Zours is now
obviously trying to save his "worst investment" at the expense of Biofrontera
and its shareholders by a way too cheap capital increase.
The ordinary capital increase (agenda item 2) can be resolved with a simple
majority. This means that Balaton might achieve the required majority even
without Maruho's votes. Therefore, it depends on you. We urge you to
critically review the intended capital measures and vote against them at the
extraordinary general meeting in the best interest of the company and the
other shareholders.
Kind regards,
Takaharu Kato
Managing Director
Maruho Deutschland GmbH
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