Heidelberg promoter may pledge 53% to banks to keep investment cos afloat
Germany's billionaire Merckle family may be forced to surrender a 53% stake in HeidelbergCement to banks, part of last-minute efforts to keep its investment companies afloat, three people familiar with the situation said.
By Bloomberg |
FRANKFURT: Germany's billionaire Merckle family may be forced to surrender a 53% stake in HeidelbergCement to banks, part of last-minute efforts to keep its investment companies afloat, three people familiar with the situation said.
A group of more than 30 banks led by Commerzbank, Deutsche Bank, Royal Bank of Scotland Group and Landesbank Baden-Wuerttemberg demanded the stake in return for a e700 mn ($971 mn) refinancing package for the family���s Spohn Cement investment unit, said the people, who declined to be identified as the plan isn���t public.
Adolf Merckle, 74, has an estimated $9.2 bn fortune that puts him 94th on Forbes��� list of the world���s richest people this year. He has sought emergency funding for more than two months as the family���s spiraling debts threaten holdings including Spohn, drug wholesaler Phoenix Pharmahandel and the VEM Vermoegensverwaltung investment unit, which owes banks about 5 bn after wrong-way bets on Volkswagen and other stock trades, the people said.
���This is a signal that Merckle has very little bargaining room left,��� said Stefan Mueller, managing partner at Proprietary Partners in Frankfurt.
���The banks want to get access to Merckle���s assets and help prop them up.��� Under terms of the offer sent late December 19 to the Merckles, the banks agreed to keep the HeidelbergCement stake in one block with the aim of selling the shares in a coordinated action to a strategic investor when stock markets recover, possibly in the third or fourth quarter of next year, the people said. Dividends paid by HeidelbergCement would be lodged in a pledged account and used to pay down the debt, the people said.
The lenders also agreed to a standstill on claims after the family couldn���t pay interest on Spohn���s debt, the people said.
Spokesmen for Frankfurt-based Commerzbank and Deutsche Bank, Edinburgh-based RBS and LBBW of Stuttgart declined to comment. The four lenders make up the so-called steering committee leading negotiations with the Merckle family. ���We don���t comment on the details of negotiations with the banks,��� said Vivien Kremer, spokeswoman for Dresden-based VEM. She reiterated earlier comments that the Merckle family aims to agree with lenders on a bridge loan before December 25.
Merckle used loans to Spohn in 2005 to gain control of HeidelbergCement. At the time, he pledged the shares purchased by the Norderfriedrichskoog, Germany-based investment vehicle to the lenders as collateral for the financing.
HeidelbergCement���s declining stock, which has lost 72% of its value this year, led the banks to seek additional financial guarantees from the billionaire in October, the people said.
Adding to his debt woes, Merckle borrowed 415 million euros from Phoenix in an attempt to plug the losses at VEM, also leaving the drug wholesaler in need of immediate financing, two people familiar with the situation said last week.
A group of more than 30 banks led by Commerzbank, Deutsche Bank, Royal Bank of Scotland Group and Landesbank Baden-Wuerttemberg demanded the stake in return for a e700 mn ($971 mn) refinancing package for the family���s Spohn Cement investment unit, said the people, who declined to be identified as the plan isn���t public.
Adolf Merckle, 74, has an estimated $9.2 bn fortune that puts him 94th on Forbes��� list of the world���s richest people this year. He has sought emergency funding for more than two months as the family���s spiraling debts threaten holdings including Spohn, drug wholesaler Phoenix Pharmahandel and the VEM Vermoegensverwaltung investment unit, which owes banks about 5 bn after wrong-way bets on Volkswagen and other stock trades, the people said.
���This is a signal that Merckle has very little bargaining room left,��� said Stefan Mueller, managing partner at Proprietary Partners in Frankfurt.
���The banks want to get access to Merckle���s assets and help prop them up.��� Under terms of the offer sent late December 19 to the Merckles, the banks agreed to keep the HeidelbergCement stake in one block with the aim of selling the shares in a coordinated action to a strategic investor when stock markets recover, possibly in the third or fourth quarter of next year, the people said. Dividends paid by HeidelbergCement would be lodged in a pledged account and used to pay down the debt, the people said.
The lenders also agreed to a standstill on claims after the family couldn���t pay interest on Spohn���s debt, the people said.
ADVERTISEMENT
Spokesmen for Frankfurt-based Commerzbank and Deutsche Bank, Edinburgh-based RBS and LBBW of Stuttgart declined to comment. The four lenders make up the so-called steering committee leading negotiations with the Merckle family. ���We don���t comment on the details of negotiations with the banks,��� said Vivien Kremer, spokeswoman for Dresden-based VEM. She reiterated earlier comments that the Merckle family aims to agree with lenders on a bridge loan before December 25.
Merckle used loans to Spohn in 2005 to gain control of HeidelbergCement. At the time, he pledged the shares purchased by the Norderfriedrichskoog, Germany-based investment vehicle to the lenders as collateral for the financing.
HeidelbergCement���s declining stock, which has lost 72% of its value this year, led the banks to seek additional financial guarantees from the billionaire in October, the people said.
Adding to his debt woes, Merckle borrowed 415 million euros from Phoenix in an attempt to plug the losses at VEM, also leaving the drug wholesaler in need of immediate financing, two people familiar with the situation said last week.
ADVERTISEMENT
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
