MG shares down 25% in Frankfurt as talks open

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The Independent Online
SHARES OF Metallgesellschaft, the stricken German metals and environmental technology conglomerate, fell 25 per cent yesterday, knocked by the news of huge losses and urgent negotiations with banks on a survival package.

It is understood that Barclays Bank is among the main creditors, with loans outstanding of DM154m ( pounds 88.4m), comparable to its exposure to the Canary Wharf development in London.

Barclays refused to confirm the number, but said: 'Our exposure is modest in the overall scheme of things.' The bank would not decide on refinancing plans until it had analysed the proposals in detail, a spokeswoman added.

The biggest creditor is Deutsche Bank, with exposure of DM540m. Banking stocks generally have been weakened by worries about the future of Metallgesellschaft. Kajo Neukirchen, MG's new chief executive, gave banks until 12 January to approve a rescue package, warning that failure could drive the company into insolvency.

Before official floor trading opened yesterday, MG shares fell to a low of DM195, but recovered subsequently to DM218 at the official Frankfurt close. MG shares were at DM278 in late trading on Wednesday, before Thursday's one-day suspension pending the announcement of the rescue talks and revised losses.

Analysts said the plunge in shares - which were DM427 in mid-November - made it almost certain that the capital increase would be carried out by MG's institutional shareholders and creditor banks.