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Special Operations

FMO aspires to be a responsible financier and to prevent financial distress among its clients. If companies run into trouble, they are transferred to our Special Operations department, where we provide support to help them get back on track where possible, offering intense supervision and tailor-made debt restructuring or rescheduling.

The number of new projects transferred to our Special Operations department in 2012 remained on par with 2011. Inflow broadly balanced outflow, with 21 new cases entering the department and 17 exiting. A host of factors were responsible for the individual companies becoming distressed; there was no one overriding cause.

Among the 17 outflowing projects, FMO was repaid by clients in 5 cases and realized an equity exit on one project. We went through an intensified effort to close projects in the portfolio that had not been operational for several years. This resulted in the writing off of 8 projects in our books. One project was transferred back to the front office, after having been restructured a few years ago. The remaining projects consisted of one debt-to-equity swap, one liquidation and one deregistration.

In recent years, we have improved our investigations into the reasons why Special Operations projects become distressed. Analyzing our distressed portfolio and whether problems could have been detected at an earlier stage is a key to ensuring FMO has done everything in its power to support its current and future clients.

By improving our understanding, we can feed lessons learned back to the front office. This valuable information can help the front office structure transactions better from the outset and equips us to better prevent problems recurring. Education around Special Operations cases remained a priority in 2012. The Special Operations department organized regular presentations and participated in FMO training courses.

For 2013 and beyond, we want to work towards increasing the value add by selecting certain distressed companies that have growth potential but are financially constrained, and working to unlock their value. For a small number of investments, we will dedicate more resources and make follow-up investments to enable the companies to emerge stronger from Special Operations.