Economically troubled German automotive supplier Leoni (Nuremberg; www.leoni.de) said in an ad hoc announcement that the sale of its automotive cable business to Thai company Stark Corporation (Bangkok; www.starkcorporation.com) appears to be on the brink of failure.

Although “all conditions for closing the purchase agreement concluded on 23 May 2022 (...) had been fulfilled in due time”, Leoni wrote, the Southeast Asian wire and cable supplier is refusing to complete the transaction and is said to have “demanded very far-reaching amendments to the purchase agreement”. The German company did not disclose any specifics.

Leoni called Stark’s refusal to implement the agreed deal a “breach of contract” and announced that it will take legal action.

For Leoni, this is about more than just the sale of a business unit. In 2021, the group reported a net loss of EUR 48 mn on consolidated revenues of EUR 5.1 bn (see Plasteurope.com of 24.05.2022). Leoni has already sold significant parts of its cable business, also to start refinancing talks with its creditors.

Should Stark continue to refuse to complete the sale, Leoni would have to forego a cash inflow of more than EUR 400 mn. This would mean the end of the negotiated refinancing concept, which was supposed to become the basis for Leoni’s financing until the end of 2025. Leoni announced that it would begin “talks with the banks about suitable adjustments”. Credit lines maturing soon are “to be temporarily extended”, the group wrote.

A statement from Stark is still pending.