FRANKFURT Jan 17 German wind park operator
Prokon said it had to stop interest payments and would not for
now redeem the millions of euros worth of so-called
profit-sharing certificates sold to mainly retail investors, as
too many were demanding their money back.
"In the current situation we are unable to make repayments
or interest payouts," the group's managing director Carsten
Rodbertus said in a statement on the group's website on Friday,
addressing its 75,000 certificate holders.
"Any payments could be and would be claimed back by an
administrator in case of insolvency proceedings anyway," he
The company, which had raised some 1.4 billion euros ($1.9
billion) by selling the profit-participation certificates, said
via its website it would not respond to media questions
following the statement.
The company had won mainly retail investors through TV
advertising campaigns on German prime-time television, but last
week warned it may have to file for insolvency if it was unable
to strike a deal with investors.
It had drawn criticism from consumer advocate groups for
luring investors with promises of possible returns of at least 6
percent, without sufficiently warning of the risks.
More and more investors have requested their money back
following several reports in German media that have questioned
whether Prokon's payouts are backed by actual profits. The
company has maintained it has a viable business model.
The company added that to avert insolvency, at least 95
percent of investors' capital would have to remain with the
company until the end of October, urging investors not to cancel
Financial reports posted by Prokon on its website showed
that as of October 2013, it had paid out 330 million euros in
interest, even though it had made a loss of 210 million euros
Profit-participation certificates offer high coupon payments
but the investor also participates in the losses of a company.
Unlike shares, the securities do not give holders any say in the
Prokon operates 50 wind parks in Germany and Poland and
employs roughly 1,300 staff.
($1 = 0.7352 euros)
(Editing by David Holmes)