MG restructuring to cost 7,500 jobs

Click to follow
The Independent Online
FRANKFURT (Reuter) - Job cuts of about 7,500 are expected at Metallgesellschaft following agreement over the weekend on a bank restructuring plan.

Rainer Lepper, chairman of the works council, said executives had told a meeting yesterday that the jobs would mainly go in Germany.

Shares in MG surged almost 20 per cent as a result of the deal with German and foreign banks to rescue the company.

'We now know that MG will not become insolvent. But the restructuring plans are far from clear,' said Werner Friedmann, an equities analyst at Bank Julius Baer.

MG shares rose to a high of DM249.80, just below the DM250 set for an issue of new shares as part of the rescue plan.

Barclays Bank, one of the first foreign creditors to reveal its opposition to the original version of the rescue plan, said last night that its credit committee had approved the agreement. The bank said the revised proposals recognised the concerns it had raised. It also 'acknowledged what the main German banks have done in terms of accepting a larger share of the burden to enable the reconstruction to go ahead'.

At an acrimonious meeting on Saturday, the foreign and some domestic creditor banks persuaded the lead German banks, Deutsche and Dresdner, to back down on their original proposals.

As a result, the banks agreed a DM3.4bn ( pounds 1.3) rescue package for the metals group, which lost almost DM2bn in 1992/93 and may face further losses of up to DM1.5bn from risky oil deals in the US.

But foreign banks are still anxious about whether they will receive enough information from the lead banks in Germany as the details of the outline plan are worked out.

Comments