Disputed Debt Hangs Over European Maestro of Private Bonds

Serial entrepreneur

Lars Windhorst

raised one of the biggest private bond deals of the year in June to fund a European acquisition spree. He added stakes in a soccer team and an haute couture fashion house to his flagship holding, the La Perla lingerie chain.But undisclosed to investors: Mr. Windhorst had struggled for two years to meet payments on a roughly $645 million bill to ADS Securities Ltd., an Abu Dhabi brokerage, according to a confidential agreement reviewed by The Wall Street Journal and interviews with people familiar with the matter. The debts stemmed from unsettled trades and unpaid loans, according to the documents and those people.

Mr. Windhorst’s high-stakes dealings highlight the murky world of his go-to fundraising source: private-placement bonds. These bonds typically have no credit ratings, little trading and scant regulation. In this instance, they have represented a lifeline to Mr. Windhorst after personal and corporate bankruptcies made it difficult for him to raise financing directly from banks, according to people familiar with the business. Mr. Windhorst initially declined to acknowledge debts to ADS in correspondence with the Journal, but in a statement Monday said he had reached a new confidential settlement with ADS over the debt. He declined to give details other than to say the amount he agreed to pay was “far below” the $645 million listed in the previous settlement agreement.

“The due amounts in cash and bonds have been fully settled,” Mr. Windhorst said. An ADS spokeswoman declined to comment on whether there was a new agreement or whether the debts were settled. Mr. Windhorst, 42 years old, started out as a teen business prodigy in Germany, went bankrupt after the dot-com crash, pleaded guilty to breach of trust in a German criminal investment fraud case in 2009 and went on to raise billions of dollars from tycoons and fund managers for an array of startups.

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Three years ago he was sued in London by investors for allegedly failing to settle bond trades—which led to creditors temporarily taking over a yacht, his office in London’s Mayfair district and a private plane. A spokesman for Mr. Windhorst said the suits had been settled. In June, Mr. Windhorst’s holding company raised €1.5 billion ($1.66 billion) that would be used to fund purchases of stakes in the Hertha Berlin soccer team and U.K. fashion house Ralph & Russo. He has the plane and yacht back, and his current business empire includes medical robotics and esports companies as well as the La Perla stores. His holding company, Tennor Holdings BV, sponsors horse-jumping competitions attended by celebrities and European royalty. Still, some bigger financial players have avoided Mr. Windhorst’s bonds. Several major institutions, including

Goldman Sachs

Group Inc. and


will no longer do business involving Mr. Windhorst or his bonds, people familiar with the matter said. Both banks were previously exposed to potential losses from Mr. Windhorst’s bonds via client trades, the people said. Goldman and Citigroup declined to comment. Then, there is H2O, an asset-management arm of French investment bank


which saw outflows after investors grew concerned about its exposure to Mr. Windhorst this summer. H2O’s chief executive has made comments supporting Mr. Windhorst in recent months. ADS is a regional brokerage in the Middle East specializing in foreign-exchange transactions. Mr. Windhorst opened an account there in 2015, according to a January 2019 settlement agreement. ADS gave him a $200 million line of credit; he used bonds and shares of companies he controlled as collateral, the agreement said.

Mr. Windhorst’s business holdings include a stake in the Hertha Berlin soccer team and the La Perla lingerie chain.


Chris Ratcliffe/Bloomberg News

Things quickly turned south. In 2016, Mr. Windhorst’s main holding company had a cash crunch. He left ADS on the hook for trades he had set up that were backed by assets that he failed to deliver, according to a summary of events written by ADS’s lawyers. The brokerage’s losses related to Mr. Windhorst meant it had to be recapitalized with about $185 million from its shareholders—mostly Emirati elites—over several years, according to a person familiar with the matter. An ADS spokeswoman said the company is in a “strong financial position.” In October 2016, Mr. Windhorst signed a personal guarantee covering the debts and committed to a payment plan with ADS, the agreement shows. He committed again to repay the debt in a revised agreement in September 2018, which pegged the bill at $776 million, and in January 2019, which updated the figure he owed to $645 million. Both agreements were reviewed by the Journal. During ADS’s battle with Mr. Windhorst over the debts, auditors Deloitte Luxembourg in 2017 retracted certification of the accounts of a Windhorst investment company that ADS had seized in the dispute. The auditors cited false information given about the investment company’s cash position, according to a summary reviewed by the Journal from a law firm hired by ADS. Mr. Windhorst and Deloitte declined to comment on the matter, as did the investment company, Sapinda Invest. Mr. Windhorst generally relies on 20 to 30 investors to buy his bonds, people familiar with his businesses say. Those people, including some who have bought bonds from him, said he sometimes entered side agreements to buy the bonds back for a higher price at a later date.

The holding company of Mr. Windhorst, second from left, sponsors horse-jumping competitions attended by celebrities and European royalty.


Tristar Media/Getty Images

One of the biggest buyers of the bonds, according to public disclosures was H2O, the Natixis-owned asset manager. Like Mr. Windhorst, H2O’s CEO,

Bruno Crastes,

owns a home in Monaco and occasionally spends time on Mr. Windhorst’s yacht, Global, and on his private jet, according to people familiar with the matter. A person familiar with Mr. Crastes said all of the socializing was for “business purposes.” H2O, which also invested in ADS bonds, declined to say if it was aware of Mr. Windhorst’s ADS dispute. In late June, H2O said it sold much of its €1.5 billion in Windhorst-related bonds at hefty discounts to meet investor redemptions after a Financial Times report detailing H2O’s financial support to Mr. Windhorst. H2O said its exposure is now below €500 million. Mr. Crastes, who declined to comment for this article, said in a video posted on the company’s website in June that Mr. Windhorst is “extremely talented,” and “we don’t subscribe to the debate around the supposed scandalous side of this entrepreneur.” Write to Bradley Hope at bradley.hope@wsj.com and Margot Patrick at margot.patrick@wsj.com

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