The Nuremberg company Leoni has been in a difficult economic situation for some time. A planned sale of its cable division is intended to reduce the mountain of debt, but fails. Now banks and shareholders have to accept considerable losses. The share price is going down.

The shareholders of the Nuremberg automotive supplier Leoni are threatened with a massive capital cut. After a failed sale of a part of the company, the highly indebted cable and wiring system specialist urgently needs fresh money. “The ongoing negotiations give reason to expect that there will be no solution without a capital cut by the shareholders,” said Leoni in Nuremberg. If the measures that are likely to be necessary are implemented, “the current shareholders would be largely diluted with their previous participation.” What is meant is that the shares lose part of their value. The banks involved would also have to waive some of their claims that were due at the end of the year.

The Leoni share price then collapsed significantly. The papers only cost 3.15 euros at times. Before the news broke in the early afternoon, the price was still more than 6 euros.

According to their own statements, Leoni has net financial debt of around 1.5 billion euros. A large part of this would have fallen due at the end of the year. The income from the sale of the profitable cable division should have been used for partial repayment. According to the plans, these would have flushed around 400 million euros into the Leoni coffers. After the Thai investor pulled out in December, a moratorium was initially agreed with the lenders. Just a few days ago, Leoni announced that CEO Aldo Kamper would resign in March and move to the top of the lighting technology group AMS Osram. In January, Leoni’s supervisory board appointed restructuring expert Hans-Joachim Ziems to the board. Ziems had already helped Leoni out of a difficult situation in 2020 and 2021.

The listed group of companies, which employs around 100,000 people in 28 countries and achieved group sales of 5.1 billion euros in 2021, received a state guarantee of 330 million euros at the time, among other things. When things seemed to pick up again, the semiconductor crisis and the temporary closure of two wire harness factories in Ukraine plagued the company.

It is now apparently planned that the banks will waive a significant part of their claims and that the shareholders will have to accept losses at the same time with a capital cut. “The background to this is that all financial creditors must also make extensive concessions in order to enable Leoni AG to continue in the long term,” says the company announcement. After that, there should be a capital increase, in which Leoni would like to collect fresh money from investors.

About three quarters of Leoni’s stock is in free float. The largest single shareholder is the Austrian Pierer Group with a stake of around 20 percent. “This has stated that under certain conditions it wants to make a significant contribution to the restructuring as part of the equity injection,” says the Leoni statement.