The Barclays move, which follows open rejection of the plan by Norddeutsche Landesbank earlier in the day, was met with an immediate threat from Metallgesellschaft that it will begin insolvency proceedings unless the plan is agreed in its entirety.
The company has been brought down by heavy losses and partly by speculation on the oil futures markets. Metallgesellschaft said in a letter to creditors that any attempt to set conditions, or to accept only part of the deal, would mean the collapse of the rescue efforts.
Deutsche Bank, organiser of the rescue attempt, underlined the extreme nature of the brinkmanship being played out during the evening and the high risk of collapse when it said there would be no extension of the deadline for acceptances. It added that agreement among the 120 creditor banks must be unanimous. The deadline expired at 6pm German time last night.
The only ray of hope came in a statement from Hilmar Kopper, Deutsche's chairman, which conceded that carrying out the rescue 'would require more time than originally planned'. But it was made clear that this referred to the time-scale for implementation of the plan now on the table rather than the deadline for agreement.
Barclays' intervention in a German corporate crisis is likely to send shock waves through the country's leading banks, which are already reeling from Norddeutsche's public opposition.
Barclays, which is thought to be owed DM154m ( pounds 59m), said it believed Metallgesellschaft should survive. It was also 'supportive in principle of a capital reconstruction led by Deutsche Bank.'
But Barclays made clear that, while it would accept the first stage of the rescue to stop the financial bleeding, more time was needed to discuss the longer-term refinancing.
The statement said: 'Company reconstructions on this scale are highly complex and it is our experience that they cannot be achieved in just one step. In our view the essential requirement is to stabilise the group in the short term and then take time to carry out a thorough analysis of the current position and future prospects of the group so that an appropriate solution can be applied.'
The bank added: 'We have made a constructive response to Deutsche Bank to this effect and offered our support in the areas where we feel further work is needed.'
The Barclays plan for a several- stage rescue is in the spirit of the 'London rules' under which UK reconstructions are organised among British banks and the Bank of England. Negotiations usually take many months and the hardest part is often the decision on how to raise new equity.
The Deutsche plan on the table includes a short-term support, with DM700m of new credits and a moratorium on existing debt, which appears acceptable to creditors. But it also calls for immediate agreement on DM2.7bn of new equity capital.
Critics say there may be a need for new equity and it could be agreed at a later stage. But without a deep analysis of the company's current situation and prospects, it is impossible to say what the future financing needs really are.
But the whole row is complicated by the position of Deutsche and some of the other big lenders as holders of substantial share stakes.
Earlier in the day, Norddeutsche Landesbank complained that main banking shareholders such as Deutsche and Dresdner banks were trying to steamroll other creditors into supporting the deal.
Nord LB was believed to be voicing the misgivings of a number of creditors, particularly among foreign banks.
Mr Kopper of Deutsche Bank yesterday described the rescue package as 'a very good plan'. Deutsche said a public statement would be issued on the outcome of the response by creditors this evening or tomorrow morning.Reuse content