Reports on Bloomberg suggest Heidelberg looks likely to obtain Euro1.4bn (A$2.4bn) in financing from banks and government funds as early as this week, a month ahead of plan, according to four people familiar with the negotiations.
According to Bloomberg lenders including Deutsche Bank AG and Commerzbank AG will provide Euro550m in loans, state-owned development bank KfW Group will provide a Euro300m loan and the federal and state governments are backing Euro550m with guarantees, with Bloomberg quoting anonymous sources. The final details of the Euro1.4bn package are being ironed out, said the insiders, who spoke on condition of anonymity because the information has not yet been made public.
“This refinancing package has been planned for a long time, and I do believe that it may well come faster than the company had indicated it,”says Holger Schmidt, an equity analyst at Equinet AG in Frankfurt who rates the shares as a buy with a price target of Euro7, they are currently trading at the Euro4 marker. The shares were four times that price in Octobetr last year, and just two years before that Heidelberg spent almost Euro140m buying back a tranche of shares at Euro33.42
Heidelberg is one of the first major German industrial companies to succumb to the economic crisis, and is struggling with falling orders from cash-strapped printers hit in the ensuing credit squeeze. The world’s biggest printing-press maker is heading for its fifth straight quarterly loss after saying last month it expects a loss for the quarter ended June 30.
Chief executive officer Bernhard Schreier said June 9 that he expects to complete the financing deal by August. Heidelberg spokesman Thomas Fichtl declined to comment on the possibility of an earlier agreement.
The state aid for Heidelberg is among the largest for a non-financial company since Germany started doling out as much as Euro75bn in guarantees for firms hurt by the recession this year and next.
Rival manufacturers manroland and KBA are none-too-happy about the government money, however manroland has said it will not be applying for any government assistance, although KBA said on June 18 it had applied for a government guarantee effective from April 1, 2010.
However the outlook is positive for the world’s leading press manufacturer as the German government requires that companies that qualify for assistance must be deemed healthy enough to survive after the government guarantees expire, so the loan provision is effectively a thumbs up for the long term future for Heidelberg.
By contract iconic car maker Porsche had a request for a Euro1.75bn loan from KfW rejected on June 30.
