(Alliance News) - STAR7 Spa on Saturday signed a lease agreement for the business unit comprising Consulting Automotive Aerospace Railway Spa, based in Turin, Italy, rights similar to rights in rem to foreign subsidiaries in Brazil and Serbia, and a second lease agreement for the business unit of STI srl, based in Bolzano, Italy, a subsidiary of CAAR Spa.

Also included in the contracts, effective Jan. 1, 2023, are contracts related to customer projects and the employment contracts of some 320 employees, the vast majority of whom are engineers.

The CAAR Group is controlled by Francesco Ellena, who founded it in 2009. Leveraging a solid know-how in the automotive field, STAR7 explains in a statement, the group has over time successfully extended the offering of its engineering solutions, mainly process engineering, to the Aerospace & Defense, Railway, Agriculture, Energy, Logistics, Infrastructure and Electronics sectors.

Over the years, the engineering services offered have developed not only in Italy but also in the rest of Europe and especially in Brazil, coming to constitute an important reference pole in the segments in which the group operates.

In recent months, the CAAR Group has been facing a crisis situation that threatens to jeopardize the smooth continuation of its business activities.

For this reason, STAR7 explains, it will "initiate an operation to restructure its debt."

The business unit lease agreement signed with STAR7 is with a view "to immediately promote the most suitable initiatives for the preservation of the continuity of the business unit itself, while respecting the primary objective of protecting the group's creditors and customers." All the banking institutions that had granted loans to CAAR were informed in advance of the transaction.

The lease agreements signed, respectively for CAAR's business unit and STI's business unit, are aimed at the sale of the units to STAR7 in the context of the CAAR Group's restructuring operation, or, if the latter is unsuccessful, at the submission of an irrevocable purchase offer by STAR7 as part of the eventual judicial liquidation.

The lease will have a term of six months and will then be automatically renewed for an additional six months if the transfer to STAR7 has not taken place within the aforementioned term. After the first six-month extension period has expired, the contract will automatically terminate unless otherwise agreed by the parties.

The annual rent amounts to a total of EUR120,000, plus VAT.

In the context of the restructuring transaction, STAR7 agrees to purchase the CAAR business unit within 30 business days of the final and non-appealable approval of the debt restructuring agreement by the competent court, provided that certain predefined conditions precedent have been met by that date.

The purchase price for both businesses, which also include operations in Brazil and Serbia, was set at a maximum amount of EUR2.8 million. In addition, downstream of the court approval, STAR7 will take on debts to banks of up to EUR3.2 million, maturing at the end of 2027 and about EUR500,000 in annual repayments, as well as debts in terms of staff severance pay of EUR1.3 million.

Upon purchase, the cash outflow will be a maximum of EUR2.8 million for STAR7, which will be able to draw on available cash.

In the event that the restructuring operation is unsuccessful and the judicial liquidation of CAAR is opened as a result, in the event that the receiver opts to take over this Agreement, STAR7 undertakes to submit an irrevocable offer to the bankruptcy proceedings to purchase the business unit and to participate in the competitive procedure for the sale of the business unit that will be called.

STAR7 on Monday closed flat at EUR8.50 per share.

By Chiara Bruschi, Alliance News reporter

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