Euro Weekly News reports that Fagor, the Spanish appliance manufacturer among other things, needs €170 million to get back on its feet as information on the position of the company begins to unfold a little more.
The company is a cooperative and most of its workers are also partners in the business. Fagor is currently in voluntary talks with its creditors and has debts that some sources place at over €800 million.
Fagor is “viable,” managing director Sergio Treviño told an interviewer. But Fagor needs €170 million, he said, and needs it soon to restructure its debt and prevent a domino effect that could cause the business to collapse.
This sum will enable the company to stop “papering over the cracks.” The plants in the Basque Region would be able to save 1,000 jobs and concentrate production on cookers, mini-appliances and heaters, Treviño said.
This news arriving after reports indicating that corporate bond trading on the business had bee suspended a few days ago while its Polish subsidiary, Fagor Mastercook, filed for voluntary protection from creditors.
Spain's financial market regulator, the CNMV, said Fagor Electrodomesticos's debt was immediately suspended from the fixed interest market as a precaution "owing to circumstances which could disturb normal trade" in its securities.
The Polish arm’s filing at a court in the northern Spanish city of San Sebastian reportedly did not, however, affect the status of the parent Fagor Electromesticos, which in turn is part of the huge Basque cooperative Mondragon Corporation.
Under Spanish bankruptcy rules, Fagor had four months to try to reach an agreement with its creditors.
Mondragon said in a statement that it felt Fagor, which has suffered a prolonged period of falling sales, "does not respond to the needs of the market and the financial resources it is demanding would not guarantee its future".
Fagor, which says it is the fifth largest electrical appliance company in Europe, had warned that a lack of financing would push it to an "imminent bankruptcy demand".
Fagor posted sales of 1.17 billion euros in 2012, a drop of over one-third since 2007, a year before Spain's sharp economic downturn began.
Meanwhile Bloomberg reports that Fagor Electrodomesticos Soc. Coop. said it may seek full protection from creditors if the company can’t refinance debt.
It goes on to report that Fagor is in talks with lenders after seeking preliminary creditor protection on October 16, the company said in a regulatory filing.
Fagor had 850 million euros ($1.16 billion) of debt as of June 30, Elena Goirizelaia, a spokeswoman for the company said in a telephone interview. That figure includes 185 million euros of subordinated debt and creditors include employees, she said.
In the UK Fagor’s sales and marketing director, Richard Walker has told ERT Magazine by KBB Review that dealers and customers shouldn’t panic in light of what are reported to be rumours.
Mr Walker told KBBR that, “My message to retailers is that we are not Fagor Electromesticos,” and went on to point out that “We are not the company that has filed for credit protection. We are a profitable company in the UK.”
In the article Mr Walker goes on to admit that he has “no clear visibility of what’s happening in Spain”.
However he has insisted that the UK is “very healthy and very profitable and has been for the last seven years”.
This afternoon on French BFMTV reported that after a cabinet session today, Arnaud Montebourg assured that the (French) government will seek to preserve as many jobs in Fagor-Brandt, the French subsidiary of Fagor group.
Fagor will file for bankruptcy, Spanish Industry Minister Jose Manuel Soria said this afternoon.
But last week its parent company Mondragon refused to rescue the firm, which has suffered a slump in sales, and Fagor has not been able to secure refinancing.
"There was a possible plan for the salvation of the company which involved an additional contribution of money on the part of Mondragon, who finally decided that they could not do it," Soria told reporters.
France 3 reports that in France that the company will be put into receivership, to allow Fagor-Brandt to continue the search for solutions to the continuation of its business.
According to a press officer, "the search for new funding that could allow its parent company, the Fagor group to continue its operations and to implement its restructuring plan did not succeed. Therefore, the Department of Fagor-Brandt decided to apply for a declaration of insolvency with the Commercial Court of Nanterre. "
This decision documents the end of the first phase of the negotiations conducted by the Fagor group Mondragon Corporation, the Spanish public institutions and financial partners.
The bankruptcy reorganisation should allow Fagor-Brandt to continue the search for solutions to the continuation of its business while maintaining the best employment interests of its suppliers and partners.
Quite what the future holds for Fagor we really do not know at this time but we wish them the best of luck.