The major shareholder Pierer wants to become the sole owner.
(Photo: dpa)
Munich The Austrian entrepreneur Stefan Pierer wants to save the ailing car supplier Leoni and become its sole owner. Major shareholder Pierer is ready to provide Leoni with 150 million euros of fresh capital and to take over part of the bank debt so that the Nuremberg company can be debt-free, Leoni announced on Wednesday.
The rescue of the crisis group is not yet secured. According to information from the Handelsblatt from industry circles, there is still resistance from the federal government and the states of Bavaria, North Rhine-Westphalia and Lower Saxony, which had given a guarantee of 300 million euros in the corona pandemic. Leoni was one of the first companies to use state aid at the time.
The rescue measure now planned goes even further than the capital cut that was announced at the beginning of February. In this case, the shareholders would have lost a large part of their stake. Now they should go away completely empty handed. After the announcement on Wednesday, the shares fell by 87 percent to 36 cents. Leoni should also disappear from the price list with the capital cut. In the summer of 2021, the share was just under 18 euros, five years ago it was more than 60 euros.
In order for the creditor banks to play along, it was necessary for an investor to put fresh capital into the company, according to industry circles. In addition, it was not certain whether the original solution would get the necessary majority. Therefore, the company stabilization and restructuring law should now be applied.
Leoni’s business model is considered sustainable by those involved. The problem is primarily the high level of debt.
The decisive figure in the rescue efforts is currently the restructuring expert Hans-Joachim Ziems, who had returned to the Leoni board. CEO Aldo Kamper had left the ailing auto supplier in the middle of the renovation to take over the chairmanship of AMS-Osram. In industry circles it is expected that a new Leoni CEO will be presented soon.
“Only Remaining Remediation Solution”
“From the point of view of the board of directors, this restructuring concept is the only remaining restructuring solution,” the statement said. Negotiations with Pierer and the creditors have progressed, and an agreement can be expected in the short term. Pierer, who owns the motorcycle brands KTM and Husqvarna, among others, has held a good 20 percent of Leoni so far.
The Austrian entrepreneur wants to become the sole owner of Leoni.
(Photo: Bloomberg)
According to the plan, the financing of the company with more than 90,000 employees would be secured until 2026. Leoni manufactures cable harnesses for the car industry, the car groups BMW, Volkswagen and Mercedes are the most important customers. It is mainly produced by hand, mainly in Eastern Europe and North Africa.
However, the company has been in crisis for years. Leoni had taken on too much on its growth course, the start-up of a new plant in Mexico turned into a disaster. Under Kamper there was definitely progress in restructuring and refinancing. But the pandemic with the problems in the auto industry led to a setback, among other things due to interrupted supply chains.
Then there was the Ukraine war. Leoni has two plants in the country invaded by Russia and had to interrupt production at times. As a result, production lines also stood still at car manufacturers as customers. In the meantime, part of the production has been relocated to other Eastern European locations.
But then the sale of the cable division, which was part of the agreed refinancing with the banks, failed. Thai buyer Stark Corp jumped out at the last minute. Leoni was missing more than 400 million euros, which should actually go to the banks.
Leoni is considered systemically important
The banks initially promised to stand still until the middle of the year. However, it was clear to everyone involved that a viable solution had to be found beforehand. Leoni is considered systemically important in the industry – the production interruption during the Ukraine war also proved this. Therefore, both the car manufacturers as customers and the banks as their business partners were very interested in a rescue.
Despite all the problems, Leoni’s sales fell only slightly to 5.1 billion euros in the past financial year. Earnings before interest and taxes collapsed to eleven million euros before special effects. When presenting the preliminary figures, the company also stated that it was to be assumed that “the refinancing process would result in a significant need for impairment”. It cannot be ruled out that it is a low to mid three-digit million amount.
With agency material.
More: Bailout for ailing auto parts supplier – Painful capital cut at Leoni