Klockner seeks protection from creditors
The unprecedented decision to seek creditor protection in the face of mounting losses stunned the German steel industry.
Klockner, which lost DM200m on its steel activities in the year ended 30 September, has applied for court permission to repay only 40 per cent of claims from its creditors, led by Deutsche Bank.
The ailing German steelmaker is now expected to step up the rescue talks it has been holding with rival European steelmakers. British Steel, Hoogovens of the Netherlands and Italy's Ilva have all been approached over co-operative ventures.
Klockner has been casting around with increasing desperation for a partner since the merger of the two German steel groups Krupp and Hosch. Its prospects have not been helped by Germany's descent into recession, state subsidies for rival steelmakers on the Continent and depressed demand.
German bank analysts said the co-operation talks would now be speeded up. But London analysts remained sceptical that any rival steelmaker would step in to help Klockner, given the level of overcapacity and the losses being suffered across the industry. 'The best thing for everyone in the steel industry is for Klockner to die and close,' one analyst said.
The company's plight is understood to have been discussed on Thursday night by the German Chancellor, Helmut Kohl, and Klaus Wedemeier, premier of Bremen, where fears are mounting that Klockner will close its steel mill.
Hans Christoph von Rohr, Klockner's chairman, said yesterday he was confident that the court would accept its application, which had been prepared with the support of creditor banks.
The group's non-steel activities, principally plastics and mechanical engineering, would not be affected. However, creditors would be offered security in these businesses, which made a profit of DM65m last year.
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