Diebold Nixdorf Enters Chapter 11 to Restructure Debt

Whilst NCR appears to be going from strength to strength, the same cannot be said of Diebold Nixdorf, No 2 in the marketplace.

The company is a merger of the previously second and third leading suppliers – the US-based Diebold and Wincor Nixdorf of Germany. In November 2015, the two announced that they had entered into a collaboration agreement. Diebold offered $1.8 billion in cash and shares to finance the acquisition. At the time it was estimated that the two companies would control about 35% of the global ATM market, with annual sales in excess of $5 billion.

Not all mergers and acquisitions turn out to be a financial success, and this has proved to be the case with Diebold Nixdorf, with the merger running into problems almost immediately.

In the first full year following the merger (2017), sales were $4.6 billion and it recorded an operating loss of 2017 of $83.6 million. For the last financial year (2022), sales were $3.46 billion, a decline of 11.4% compared with the previous year. An operating profit of $137.1 million in 2021 turned into a loss of $211.7 million in 2022.

As another indicator, in June 2017 the company’s share price was $27.30, but by this May had collapsed to just $0.25.

At that point, Diebold Nixdorf announced it was entering into a pre-packaged chapter 11 reorganisation plan with its main financial stakeholders in order to effect a comprehensive debt restructuring transaction that is intended to be completed efficiently and quickly.

A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a ‘reorganization’ bankruptcy. Usually, the debtor remains ‘in possession’, has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money.

The restructuring is expected to significantly reduce debt and leverage levels, and provide substantial additional liquidity to support ongoing operations and establish a long-term, sustainable capital structure for the company, it said.

It will continue to pay vendors and suppliers through the expected restructuring process in the ordinary course of business.

According to Octavio Marquez, Chairman, President and CEO of Diebold Nixdorf, ‘with the support of our creditors, we have reached an agreement to restructure and strengthen our balance sheet, enhance liquidity and position Diebold Nixdorf for long-term success.’ 

‘Our strengthened financial position also enables us to better serve our customers, employees, suppliers and partners. I am excited about the future of Diebold Nixdorf and all we will accomplish,’ he added.

Under the restructuring support agreement, the consenting creditors have agreed, subject to certain terms and conditions, to support restructuring transactions that would result in the discharge of a significant portion of existing funded debt of the company and certain of its subsidiaries.

The company’s outstanding common shares will be cancelled.

Although the restructuring transactions are contingent upon certain conditions and the finalisation of further definitive agreements, Diebold Nixdorf hopes to complete the process by the third quarter of 2023. Upon completion, the common shares of the restructured company are expected to be listed on the New York Stock Exchange.