Management of machinery manufacturer Battenfeld Injection Moulding (Kottingbrunn / Austria; www.battenfeld-imt.com) has filed an insolvency petition in a Vienna court after a turbulent end to 2007 that continued into 2008 and saw the company’s manufacturing activities being transferred – at least on paper – to a new private equity owner and back again. The events unfolded in quick sequence following the 21 December 2007 surprise announcement of the divestment by Adcuram (Munich / Germany; www.adcuram.de) and the acquisition by OOD Private Equity (London / UK).

Around 472 employees – who apparently were not paid their December salaries – will be affected by the insolvency. The Austrian economic and political sector is striving to find a solution to the crisis at the machinery maker, which is one of the largest employers in the state of Lower Austria and one of the pioneers in the injection moulding sector. The company’s order books are said to be full, but it is believed to be carrying a double-digit euro debt burden.

Battenfeld’s management, under recently appointed CEO Georg Tinschert (formerly of Austrian machinery producer Engel) is said to have first learned of the sale through a Munich notary. It said it was forced to file for insolvency as it had not received the funds needed to continue operation, either from the old or the (erstwhile) new owner. It also cited a “surprising and unexpected change of ownership.”

In announcing the divestment of machinery production in late December, Adcuram said Battenfeld – acquired October 2006 from long-time owner SMS – see Plasteurope.com of 17.10.2006 – would concentrate in future on the service and spare parts business with EUR 30m in annual sales and 140 employees in Austria and Germany. These activities, under the leadership of Philipp Hertel, were to be carved out as early as February 2008 and moved to a site at Hirtenberg / Austria, near the Kottingbrunn headquarters.

Adcuram’s pulling the plug on the deal with OOD can be seen as a response to the overwhelmingly negative publicity the sale news received, particularly in Austria. Critics pointed out that OOD is virtually unknown and had not come forward with a statement of its own on the deal. Compounding the negative publicity over the supposed “fly by night” sale action was Adcuram’s reluctance to comment on the future of new machinery production in Austria.

In a statement, as well pointing to difficulties in the machinery market generally, the Munich investor backed by German and Austrian funds said the bankruptcy had little to do with the change of ownership. It directly and indirectly criticised management errors made under SMS, noting that the “entire Battenfeld injection moulding group” was in a crisis at the time it acquired the Kottingbrunn activities, due in part to the fact that the portfolio is largely concentrated in the commodities sector, which is characterised by “ruinous price wars.” This, it said, put the company at a “competitive disadvantage.”

Adcuram said Batttenfeld’s finances took a “dramatic” turn for the worse during 2007, despite its injection of a “substantial million euro sum” into the business. It cited unexpected price increases and difficulty in procuring materials such as steel and cast-iron parts”. The private equity firm remarked that “a small customer such as Battenfeld was treated with low priority” by its suppliers, “despite its willingness to accept price increases,” which “could not be passed on” to its own customers. Adcuram also criticised SMS’ relocation of production from Meinerzhagen / Germany to Kottingbrunn, where it said site management was literally unequipped to deal with the intensified competitive situation.