The division sale has burst for the time being – and thus the restructuring is delayed.
(Photo: Leoni)
Munich The sale of the cable division of the ailing auto supplier Leoni has surprisingly collapsed. The Thai buyer Stark had requested far-reaching changes to the purchase contract shortly before it was completed, Leoni explained in a mandatory notification on Tuesday.
This means that the entire refinancing concept, including a planned capital increase, cannot be implemented for the time being. The consortium banks have agreed to temporarily extend the credit lines due on December 31st.
Leoni has been in crisis for years. Initially, the wiring system specialist had taken on too much when expanding abroad. During the corona crisis, Leoni was one of the first companies in Germany to have to seek state aid.
Leonie cable business: Other interested parties didn’t offer nearly as much
Since then, the group has made progress in restructuring. But then production in the Ukraine came to a standstill because of the Russian war of aggression. This led to production problems at the big car manufacturers – Leoni’s most important customers.
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An essential part of the refinancing concept until the end of 2025 was the sale of the cable division Business Group Automotive Cable Solutions to the Thai Stark Corporation. The unit, which achieved sales of around 1.3 billion euros last year, was valued at almost 600 million euros, more than 400 million euros should flow to Leoni after deducting financial liabilities and pension costs. The sum should largely be put into debt reduction.
Now the Thais have canceled the purchase. Leoni sees “no contractual basis for the refusal to execute” and sees the behavior as a breach of contract. “Enforcement measures” will be taken against Stark.
According to information from the Handelsblatt, there were several strategic interested parties and financial investors who bid for the cable division. But Stark clearly made the highest offer. It will not be so easy to achieve a similarly high proceeds by selling to another interested party. Therefore, it cannot be ruled out that Leoni will stick to the cable business for the time being.
The capital increase must also be postponed
A capital increase was actually announced as the next step, for example by issuing a convertible bond. This project will be paused for now. In industry circles it is assumed that the banks are fundamentally open to alternative refinancing concepts. Leoni is considered systemically important for the automotive industry.
But Leoni is under pressure. In the third quarter, the loss rose from 27 to 88 million euros. “It’s not without good reason that experts are talking about the perfect storm that the automotive supplier industry is facing,” said CEO Aldo Kamper when the bad figures were presented. The increasing costs for materials and logistics as well as tight supply chains and volatile product calls made things difficult for the industry.
Leoni’s turnover increased by a comparable seven percent to 955 million euros. However, this also includes “reimbursements received”. The car manufacturers had contributed to the increased costs and thus helped the important supplier.
The share price fell only briefly after the setback was announced on Tuesday, and in the afternoon it was almost unchanged again at EUR 6.25. However, the Leoni price has already fallen by 37 percent this year. In the past five years, the company has even lost 90 percent of its market value.
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