MG rescue approved by main investors

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The Independent Online
DEUTSCHE BANK and several other big institutional shareholders yesterday approved the rescue plan for Metallgesellschaft as an ugly row broke out among creditors of the German metals and environmental technology conglomerate.

Norddeutsche Landesbank, one of MG's main lenders, accused the big shareholders, including Deutsche and Dresdner banks, of seeking to stampede creditors into approving the survival package.

Deutsche's board of directors announced its support for the rescue proposals a day before the deadline set by MG's new chief executive, Kajo Neukirchen.

The proposals foresee an injection of DM2.7bn ( pounds 1.04bn) in new equity capital. The big banks also offered DM700m in new credit lines - more than the DM500m requested by MG. A source said the banks felt MG might have underestimated its near-term liquidity needs.

In addition, although it would not mention names, Deutsche Bank said that other main shareholders had given their backing to the rescue deal. It expressed confidence that the plan would receive the required support by the time the deadline expired this evening.

Deutsche dismissed as 'objectionable and unprofessional' the Norddeutsche Landesbank's criticisms, saying they endangered the entire rescue attempt.

Rejecting the accusation that it was imposing its will on other creditors, Deutsche said the importance of MG as a company and the urgency of resolving its problems had necessitated the rapid pace of the rescue efforts.

Apart from Deutsche and Dresdner, the main shareholders that have seats on MG's supervisory board are the insurance giant Allianz AG Holding and Daimler-Benz.