Hajo Neunkirchen, the new chief executive brought in after most of the board were sacked last month, confirmed the group had made a DM1.8bn (pounds 697m) loss in the 1992/93 financial year, more than five times the amount previously disclosed.
In addition, liquidation of long-term oil contracts in the US could lead to further losses of DM1.5bn. 'In this situation, possible bankruptcy cannot be ruled out,' the company said. It had informed creditor banks at an inconclusive meeting on Wednesday that it wanted a DM2.7bn (pounds 1.04bn) injection of new equity capital.
The board also requested DM500m in new credit lines for the parent company, Metallgesellschaft AG, and agreement in principle to a three-month debt moratorium.
Industry sources said debts in the MG group were more than DM9bn. The company said that after the proposed credit and capital measures, it would have core capital of DM1.6bn and improved liquidity - sufficient to ease the restructuring process. The banks, including MG's big shareholders, Deutsche and Dresdner, were asked to approve the rescue plan by 12 January.
Mr Neunkirchen said MG 'must try to reduce financial debt . . . by our own actions and not just through capital measures'. It had to cut personnel costs by DM700m, he said. MG employs 58,000 people.
Mr Neunkirchen also declared his intention to dispose of MG's 47.5 per cent stake in Kolbenschmidt, a car component maker, as well as a Toronto-based mining subsidiary.
Sources at Metallgesellschaft Ltd, one of the top 10 clearing businesses on the London Metal Exchange, said the company had a healthy balance sheet and steps had been taken to stop money flowing to other parts of the stricken group. 'Everyone is a bit careful, but it is a viable, going concern with a good profit record,' a source said.
MG's shares were suspended yesterday pending the company's statement in Frankfurt, and analysts expected the stock to resume trading sharply lower this morning. Shares in Deutsche, which has a DM539m exposure to MG, came under pressure yesterday along with those of the other big creditor banks.Reuse content