Munich The ailing auto supplier Leoni has agreed on a restructuring concept with the banks. This means that the future of the wiring system specialist is secured for the time being. In the course of the refinancing, the new CEO will be Klaus Rinnerberger, the previous chairman of the supervisory board, Leoni announced on Monday. He is a confidante of the future sole owner Stefan Pierer.
The agreement is bitter news for the shareholders: they will get nothing from the agreement because of a capital cut. The stock made a strong speculative jump after the news was announced. However, the course had fallen from more than 17 euros to the cent range in the course of the crisis in the past year and a half. On Monday, the course was temporarily at 0.46 euros.
On the other hand, the car manufacturers can breathe a sigh of relief. Leoni is one of the most important suppliers for the industry. When production had to be stopped in two plants in the invaded country in the course of the Ukraine war, the production lines at BMW and Volkswagen also came to a standstill at times. Therefore, the manufacturers were very interested in a stable solution.
According to industry circles, renovator Hans-Joachim Ziems, who had moved to the Leoni board, was in regular contact with the manufacturers. There was a close vote. “It’s a good solution for the manufacturers.” The creditor banks are also likely to have had the fate of their important automotive customers in mind when they approved the agreement.
Leoni had already announced the basics of the restructuring concept last week. Major shareholder Stefan Pierer is ready to provide Leoni with 150 million euros of fresh capital and to take over part of the bank debt. Pierer, who owns the motorcycle brands KTM and Husqvarna, has previously held a good 20 percent of Leoni.
The solution, which was confirmed on Monday, now goes even further than an initial refinancing concept that emerged in early February. At that time, a strong dilution of the shares of the shareholders was planned, but not a complete capital cut. But there were doubts, among other things, as to whether there would have been the necessary majority for this solution.
Therefore, the Business Stabilization and Restructuring Act is now to be applied. The influence of the shareholders in this process is very small. “The value of the share will be zero in the end,” it said in industry circles.
The supervisory board also announced the succession plan for the previous boss Aldo Kamper, who had switched to AMS-Osram as the new boss in the middle of the restructuring. The new CEO will be the head of the supervisory board, Rinnerberger. This solution has been around for a long time. First, however, the refinancing concept had to be in place. According to industry crises, Rinnerberger is not an interim solution, he should take on the task firmly.
The new CEO has a lot of experience in the supplier industry
“I’m looking forward to doing my part to push ahead with the advanced restructuring – the common goal of a sustainably stabilized Leoni firmly in view,” said Rinnerberger in a statement. The manager has many years of experience in the auto industry. He worked in various functions for the Magna Group and reorganized the suppliers Polytec and Peguform. He has also been a member of the board of Pierer Industrie AG since 2010.
Rinnerberger moved into the Leoni Supervisory Board almost two years ago. In May 2022 he took over the presidency.
Leoni has been in crisis for years. The company had overstretched itself on its growth course, and the start-up of a new plant in Mexico ended in 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.
Leoni was one of the first companies in Germany to have to apply for state aid. Therefore, the federal government and the states of Bavaria, North Rhine-Westphalia and Lower Saxony also had to agree to the refinancing. They had given guarantees of over 300 million euros.
Corona was not the last setback for Leoni. After the outbreak of the Ukraine war, production was quickly restarted. But the crisis showed how vulnerable the supply chains in the automotive industry are. 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.
In industry circles it was emphasized that Leoni’s business model was stable. The demand for the products is undiminished. The problem of the company is above all the high mountain of debt. After the liberation, the chances of recovery are good.
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.
More: Austrian entrepreneur Pierer takes over Leoni completely