To get back on its feet again, Leoni (Nuremberg, Germany; www.leoni.de) said it plans to sell further parts of the group – its automotive cable business is to be purchased by the Stark Corporation (Bangkok, Thailand; www.starkcorporation.com), one of Southeast Asia’s leading wire and cable suppliers. “With this decision, we are bracing our balance sheet, supporting the ongoing refinancing discussions and driving forward our well-known strategic focus on the wiring systems business,” said Leoni CEO Aldo Kamper.

The sale of Automotive Cable Solutions is still subject to various closing conditions, such as the required merger control and investment control clearances. These are expected to be issued within six months. Leoni’s financing partners would also have to give their OK; the company’s executive board and supervisory board, as well as Stark’s board of directors, have already approved the deal.

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With 10 sites in seven countries and a total of 3,300 employees, the automotive cable business generated sales of around EUR 1.3 bn last year through the manufacture of standard, special, and charging cables. For the purpose of the transaction, the division’s value is assessed at EUR 560 mn. After deducting financial liabilities and pension charges, Leoni’s management expects a cash inflow of “well over EUR 400 mn”.

The German firm, which reported a net loss of EUR 48 mn on consolidated sales of EUR 5.1 bn in 2021, is driving forward its focus on wiring systems with the divestment. In the course of the reorientation, the company has already sold its subsidiary, Leoni Fiber Optics (see Plasteurope.com of 15.12.2021), parts of the industrial cables business (see Plasteurope.com of 11.10.2021), the Stolberg cable plant, and the Swiss subsidiary.

In the first quarter of 2022, sales were down almost 7% against the same period of the previous year, totalling EUR 1.26 bn. The main reason for the decline was the sale of its Wire & Cable Solutions segment. Adjusted EBIT was EUR 17 mn in the red – after a plus of EUR 29 mn in Q1 2021 – due to higher feedstock, logistics, and energy costs, excluding the EUR 125 mn accounting profit on the sale of the industrial business.

At present, the now-severely trimmed group is in “constructive, advanced talks” for a refinancing concept that is likely to include an equity capital measure, for example by issuing new shares.