"We are all facing a lively and unprecedented scenario on account of the COVID-19 outbreak, which began in Wuhan, China, and in the first quarter of 2020 affected nearly the whole world. The imposed limitations by the governments had a negative impact on ELG's financial position and results of operations in Q1 2020," commented CEO of the Group, Indrek Rahumaa.

"As response steps to the quantity fall, we've initiated several cost and cash saving activities across all the Group's companies. These activities will enable us to restart the production in June 2020 when lock-down steps in the countries are fully or partly released and if the customers resume their surgeries and restart their orders in the group," additional Rahumaa.

"As we look forward, and also the group adapts itself and its operations to various restrictions imposed by the local authorities to include the further spread of COVID-19, we appreciate the patience and cooperation with our clients, suppliers, workers and financiers. All implemented steps, as well as the general strategy by the Group and its companies, are targeted in the long-term sustainability of their business in addition to its positioning for the duration of restored demand. Our company model relies on providing high-quality products in comparatively short lead times, sourced locally. Here is the fundament that is secure as many short-term disruptions come and go," noted Rahumaa.

The reduction in earnings was mainly due to the COVID-19 outbreak followed by partial deferral of requests by customers to later months as well as a significant reduction of orders during the lock-down period. Additionally, as a result of the introduction of a smaller Felina swimwear collection in 2020, earnings of swimwear were also lower in Q1 2020 as compared to the exact same period last year.

Profitability margins in Q1 2020 were below the previous year which is also explained by COVID-19 outbreak and shortfall in revenue which made it tricky to cover part of their fixed prices. Normalized EBITDA in Q1 2020 amounted to EUR 482 thousand and diminished by 82.0percent in comparison with Q1 2019. Normalized EBITDA margin in Q1 2020 and Q1 2019 was 2.8% and 12.7percent respectively.

Normalized net profit in Q1 2020 amounted to a reduction of EUR 1,364 million, compared to a normalised net gain of EUR 318 million in Q1 2019. Reduce net profit is also explained by the reasons described above.

The group has previously reported from the report for nine months and third quarter 2019 and for twelve months and third quarter 2019 that the group's Net Interest Bearing Debt to EBITDA ratio exceeded the maximum 4.25 allowed under the maintenance evaluation of the Original Bond Requirements and Conditions issued on 22 February 2018.

About 13 December 2019, the Parent company of the group officially initiated a written process below the bond requirements and conditions to be able to waive a financial covenant breach and also to make certain amendments to the terms and conditions as further explained in the note of written process.

About 16 January 2020, the proposal was passed along with a majority of the holders of the bonds voted for this. However, it was a requirement for those amendments to the terms and conditions to come into effect was a capital contribution by way of equity or subordinated loans are supplied to the provider.

Due to the COVID-19 pandemic, the group hasn't been able to increase the required sum of equity in full. Hence, the amendments to the terms and conditions as accepted in the written process, including the alterations to the maintenance test, have not come into effect, which has resulted in the breach of the maintenance evaluation.

The management and the bankers have ongoing talks with certain holders of the Bonds and other investors to discover options for your Group.