Failed Philipp Holzmann Files For Insolvency

The troubled German construction firm Philipp Holzmann has filed for insolvency after failing to clinch a rescue plan with its creditors. The decision comes just two and a half years after being saved by a high-profile bail-out orchestrated by Chancellor Gerhard Schroeder.

Talks between the firm\'s seventeen creditor banks broke down during the afternoon, leaving no other option but for the organisation to file for insolvency.
Holzmann employs 23,000 people and has now become one of Germany\'s biggest ever corporate failures. Holzmann\'s decision to file for insolvency is a blow for the Chancellor and his coalition government just months before a general election where the economy and employment are set to be centre stage.

A weak domestic construction market and a loss-making property portfolio have weighed heavily on Holzmann\'s balance sheet. A rescue plan was drawn up by Deutsche Bank, the firm\'s largest shareholder, but its creditors rejected it as not providing a viable basis for the firm to keep operating.

Deutsche Bank\'s plan focused on selling the firm\'s profitable HSG technical services unit, the waiving of 200m euros ($177m) in debt and transferring the property portfolio to creditor banks for about 500m euros.
Holzmann has crippling debts of 1.6bn euros, weighed down by the poorly performing property assets. The steep downturn in the German construction market last year has brought it estimated losses of 240m euros, triple the amount for the year before. Some of its problems stem from heavy investments in building in eastern Germany after reunification, which never paid off.

Chancellor Schroeder recently said he was confident that the creditor banks would agree a solution safeguarding the company\'s future although officials have said there will be no more state aid. Holzmann shares, which have been under severe pressure in recent days, were suspended before the announcement that the talks had failed.

The shares plunged 42% to 2.86 euros after trading resumed before being suspended again pending the announcement of insolvency.

Author: Neftegaz.ru