The Upper Austrian entrepreneur Stefan Pierer (Pierer Mobility/KTM) wants to save the ailing German car supplier Leoni and become its sole owner. Major shareholder Pierer is ready to provide Leoni with 150 million euros of fresh capital and to take on almost half of the debt with 708 million euros, so that the Nuremberg company can be debt-free, Leoni announced on Wednesday. Leoni is to be taken off the stock exchange.
The other shareholders are left empty-handed in the course of the capital cut, which had already been expected. The banks and promissory note creditors can hope to get some of the money back after the restructuring. The committees of the creditor banks and the federal states of Bavaria, North Rhine-Westphalia and Lower Saxony, as well as the federal government as guarantor, still have to agree. Leoni would thus be saved until the end of 2026. The Bavarian company is a highly indebted cable and wiring system specialist and has been in urgent need of fresh money for some time. Sales in 2022 amounted to 5.1 billion euros.
“From the point of view of the board of directors, this restructuring concept is the only remaining restructuring solution,” the statement said. Negotiations with Pierer and the creditors have progressed, and an agreement can be expected in the short term.
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 declared that under certain conditions it wants to make a significant contribution to the restructuring as part of the equity injection,” Leoni had already announced at the beginning of February after a failed sale of part of the company.
Pierer-Holding has steadily increased its stake in Leoni over the past few years. After taking over ten percent of the shares about two years ago, Stefan Pierer wanted to accelerate the restructuring. “I’m already planning an active role there as an anchor investor,” Pierer told the “Automobilwoche” at the time. “So far there has been no core investor at Leoni, and listed companies without a core investor are sometimes difficult to manage.” He did not rule out taking over further shares, which is what happened. Pierer left a complete takeover open in March 2021: “It’s still too early for that.”
Leoni manufactures cable and network solutions for the automotive industry, including wire harnesses. A partial sale, which should flush 400 million euros into the cash register and make a significant contribution to debt relief, fell through at the end of last year. The company emphasizes that it considers its business model to be solid and that the reason for the imbalance is primarily to be found in the high debt burden.
Operational Profit
The ailing supplier achieved a narrow operating profit before special items in 2022. However, the operating profit fell by EUR 119 million to around EUR 11 million compared to 2021 (EUR 130 million). Expected value adjustments due to the restructuring were not yet included. A considerable need for value adjustments is expected during the ongoing restructuring, which could burden the result with a low to mid three-digit million amount. The cash flow was also positive last year only thanks to sales proceeds of EUR 278 million and amounted to around EUR 126 million (previous year minus EUR 12 million).
For the 2023 financial year, Leoni expects sales of around EUR 5.5 billion, EBIT before special items in the high double-digit million range and a balanced free cash flow, which, however, after financing costs, will also be significantly negative in 2023, assuming a successful refinancing – which Pierer is now pulling through become. “Despite the progress, the operational development shown in 2022 is not sufficient to bear the interest and leasing expenses,” explained Leoni when presenting the business figures for the previous year.
Leoni CEO Aldo Kamper surprisingly took his hat off in the middle of the renovation. The 52-year-old Dutchman is leaving the company at the end of March and has been boss there since 2018. Successor has not yet been announced.
The Pierer Holding also owns the majority of the motorcycle manufacturer Pierer Mobility (“KTM”), the racing supplier Pankl Racing and the other German automotive supplier SHW.