SAARGUMMI
Insolvency: Tug-of-war between investors and creditors could break sealing systems producer / 400 job cuts planned
 SaarGummi’s facility in Wadern-Büschefeld (Photo: SaarGummi) |
Private equity investor Odewald & Companie (Berlin / Germany; www.ocie.de) could find its track record marred by its investment in SaarGummi technologies (Schengen / Luxembourg), holding company of the SaarGummi group. Odewald acquired this producer of EPDM and TPE sealing profiles and mouldings for the automotive industry from Orlando Management (Munich / Germany; www.orlandofund.com) in 2007.
The group’s largest company SaarGummi Deutschland (Wadern-Büschfeld / Germany; www.saargummi.com) and principal production site filed for insolvency on 5 November 2010. The holding company and its other sites and subsidiaries are not yet affected. The court in Saarbrücken has appointed Udo Gröner of law firm Heimes & Müller (Saarbrücken / Germany; www.heimes-mueller.de) and Jean-Olivier Boghossian of specialist insolvency lawyers Schultze & Braun (Saarbrücken / Germany; www.schubra.de) to act as provisional insolvency administrators.
The management cited the failure of its longstanding efforts to restructure the company as the reason for the insolvency. The management and works council at the Büschfeld site agreed on a basic restructuring plan back in March, including relocation of some production lines to foreign sites which would have meant 138 job losses. In addition, 40 administrative jobs were to be axed. This was SaarGummi’s response to its financial difficulties. It is reported that insolvency was only warded off last year thanks to a guarantee by the federal state.
Rolf Zimmermann, CEO at the time, told the media that the site was making a loss because sales had plunged 35% in 2009. The subsequent restructuring plans included exploring the possibility of selling non-automotive activities (shoe soles and roofing). However, only the railway construction activities were divested to Vossloh in early 2010. Interim CEO Zimmermann was subsequently replaced by Dr. Georg Weyer (52) who aims to use the insolvency phase to put the company back on track.
The “Handelsblatt” newspaper reports that SaarGummi has given a consortium of banks headed by Landesbank Baden-Württemberg assurances that it will meet a range of financial covenants in 2010 and 2011. If it fails to do so, 75% of its shares will pass to a trust company which will immediately take steps to sell SaarGummi Deutschland.
The management and representatives of the workforce are currently negotiating about further possible cut-backs. It is rumoured that this would involve cutting 400 jobs, even though the operational business is said to be doing well. SaarGummi’s workforce currently includes more than 100 temporary workers.
Odewald has refuted allegations that the problems were caused by its investment and the subsequent debt burden placed on the company. Odewald reportedly paid around EUR 260m for 90% of the shares but the investment was backed by little capital of its own. Despite concessions, especially by the banks and workforce, Odewald says it was unable to reach agreement on the contributions to be made by all sides. Automotive producers in particular would not have agreed to continued operation of the company without an insolvency filing. The private equity company has injected an additional EUR 20m into the company since acquiring it.
SaarGummi reported global sales of EUR 300m in 2009, down from EUR 380m in 2008. The group has 3,300 employees, 850 of whom work at its largest site in Büschfeld. Its principal customers are VW (25%), Daimler (21%) and BMW (19%).
The group’s largest company SaarGummi Deutschland (Wadern-Büschfeld / Germany; www.saargummi.com) and principal production site filed for insolvency on 5 November 2010. The holding company and its other sites and subsidiaries are not yet affected. The court in Saarbrücken has appointed Udo Gröner of law firm Heimes & Müller (Saarbrücken / Germany; www.heimes-mueller.de) and Jean-Olivier Boghossian of specialist insolvency lawyers Schultze & Braun (Saarbrücken / Germany; www.schubra.de) to act as provisional insolvency administrators.
The management cited the failure of its longstanding efforts to restructure the company as the reason for the insolvency. The management and works council at the Büschfeld site agreed on a basic restructuring plan back in March, including relocation of some production lines to foreign sites which would have meant 138 job losses. In addition, 40 administrative jobs were to be axed. This was SaarGummi’s response to its financial difficulties. It is reported that insolvency was only warded off last year thanks to a guarantee by the federal state.
Rolf Zimmermann, CEO at the time, told the media that the site was making a loss because sales had plunged 35% in 2009. The subsequent restructuring plans included exploring the possibility of selling non-automotive activities (shoe soles and roofing). However, only the railway construction activities were divested to Vossloh in early 2010. Interim CEO Zimmermann was subsequently replaced by Dr. Georg Weyer (52) who aims to use the insolvency phase to put the company back on track.
The “Handelsblatt” newspaper reports that SaarGummi has given a consortium of banks headed by Landesbank Baden-Württemberg assurances that it will meet a range of financial covenants in 2010 and 2011. If it fails to do so, 75% of its shares will pass to a trust company which will immediately take steps to sell SaarGummi Deutschland.
The management and representatives of the workforce are currently negotiating about further possible cut-backs. It is rumoured that this would involve cutting 400 jobs, even though the operational business is said to be doing well. SaarGummi’s workforce currently includes more than 100 temporary workers.
Odewald has refuted allegations that the problems were caused by its investment and the subsequent debt burden placed on the company. Odewald reportedly paid around EUR 260m for 90% of the shares but the investment was backed by little capital of its own. Despite concessions, especially by the banks and workforce, Odewald says it was unable to reach agreement on the contributions to be made by all sides. Automotive producers in particular would not have agreed to continued operation of the company without an insolvency filing. The private equity company has injected an additional EUR 20m into the company since acquiring it.
SaarGummi reported global sales of EUR 300m in 2009, down from EUR 380m in 2008. The group has 3,300 employees, 850 of whom work at its largest site in Büschfeld. Its principal customers are VW (25%), Daimler (21%) and BMW (19%).
15.11.2010 Plasteurope.com [217765-0]
Published on 15.11.2010
German version of this article...