19. The subject matter and scope of the examination of capital coverage follows from Article 37 para. 6 SE Reg. According to this provision, a confirmation is required that the stock corporation changing its corporate form has net assets at least in the amount of the share capital set forth in the articles of association of the SE (subscribed capital) and the reserves which are non- distributable under the law or the articles. The reserves which are non-distributable include primarily the statutory reserves (§ 150 para. 1 and para. 2 AktG) and the capital reserves
pursuant to § 272 para. 2 nos. 1 through 3 HGB (§ 150 para. 3 and para. 4 AktG).1
20. The equity capital of Klöckner & Co AG consists of the following as of 31 December 2007:
31 December 2007 Distributable
Non-distributable capital and capital
reserves
T€ T€ T€
Equity
Subscribed Capital 116,250 0 116,250
Capital reserves 260,496 109,949 150,547
acc. to § 272 para. 2 no. 1 HGB 87,750 0 87,750
acc. to § 272 para. 2 no. 2 HGB 62,797 0 62,797
acc. to § 272 para. 2 no. 4 HGB 109,949 109,949 0
Other revenue reserves 26,592 26,592 0
Retained profits 37,200 37,200 0
440,538 173,741 266,797
21. The subscribed capital of the Company under § 4 para. 1 of the articles of association of Klöckner & Co AG as of 31 December 2007 is T€ 116,250 and has been completely paid in. 22. The general shareholders meeting on 21 June 2006 decided on authorized capital of T€ 50,000.
This was registered in the commercial register on 26 June 2006 and is available, among other purposes, for the purpose of financing acquisition. Pursuant to § 4 para. 2 of the articles of association, the Executive Board is authorized with the consent of the Supervisory Board to increase the share capital by issuing new bearer shares at one time or on multiple occasions up to a total of T€ 50,000 until June 20 2011. The capital increase can occur either in exchange for cash contributions or in exchange for contributions in kind for the purpose of acquiring companies, participations in companies or divisions. The Executive Board has not made use of this authorization up to the present time. Furthermore, according to representations received from the Executive Board there is no intention to use the authorized capital prior to the general shareholders meeting on 20 June 2008. In this regard, there is no change in the subscribed capital.
The regulation under § 4 clause 2 will be taken into the new articles of association of Klöckner & Co SE, but in a maximum up to the amount and number of shares in which and in which amount the authorized capital under § 4 para. 2 of the articles of association of Klöckner & Co AG still exists in accordance with the transformation plan at the time the transformation of Klöckner & Co AG into a European Company (SE) takes effect. In accordance with the above discussion, it can continue to be assumed that there is authorized capital amounting to T€ 50,000.
23. In addition, conditional capital in the amount of T€ 11,625 was created in accordance with a resolution of the general shareholders meeting dated 20 June 2007. Pursuant to § 3 para. 3 of the articles of association, this conditional capital serves to carry out conversions of convertible bonds. The issuance of the new shares will be at a conversion price of € 80.75. The conversion period runs until 18 July 2012. The conditional capital increase is to be carried out pursuant to § 3 para. 3 of the articles of association only to the extent that holders or creditors of subscription rights and conversion rights make use of these rights or to the extent that holders required to convert fulfill their duty to convert and to the extent that no cash compensation is granted or no treasury shares or shares created under authorized capital are used to service the conversion. At the present time, there have been no conversions. No exercise of conversion rights is anticipated prior to the general shareholders meeting on 20 June 2008. Accordingly, there is no change in the subscribed capital.
As is apparent from § 4 clause 3, the regulation will be incorporated into the new articles of association of Klöckner & Co SE, but only up to a maximum amount and number of shares for which the conditional capital increase has not yet been carried out at the time the conversion of Klöckner & Co AG into a European Company (SE) in accordance with the conversion plan takes
effect. According to the above discussion, conditional capital in the amount of T€ 11,625 can be assumed in this regard.
24. The premium realized in the context of the initial public offering on 28 June 2006 as a result of issuing the shares in the amount of T€ 87,750 was placed in the capital reserves which are non- distributable in accordance with § 272 para. 2 no. 1 HGB.
25. The option premium in the amount of T€ 62,797 resulting from the conversion right in connection with the issued bonds was placed in the capital reserve which is non-distributable in accordance with § 272 para. 2 no. 2 HGB.
26. The other amount in the capital reserves in the amount of T€ 109,949 results, among other reasons, from additional payments by the shareholders (§ 272 para. 2 no. 4 HGB) and, as well as the free revenue reserves, is subject to distribution in the amount of T€ 26,592 together with the retained profits amounting to T€ 37,200.
27. The articles of association of Klöckner & Co AG dated 20 June 2007 do not provide for the creation of any reserves with restrictions on distribution.
28. It can be determined as an interim result that the equity capital within the meaning of Article 37 para. 6 SE Reg. for the Company subject to the examination on covering capital plus the reserves which are non-distributable under force of law amounted to T€ 266,797 as of 31 December 2007.
29. On the basis of the interim financial statements of Klöckner & Co AG as of 31 March 2008 (not audited) presented to us as well as the information provided, there has been no change in the capital and the reserves which are non-distributable by force of law up to the present time. 30. Accordingly, the issue was to be examined whether Klöckner & Co AG, which is changing its
corporate form, has net assets at least in the amount of its subscribed capital of T€ 116,250 plus the reserves which are non-distributable by force of law in the amount of T€ 150,547, thus, in a total amount of T€ 266,797.