IPIC and MAN spat threatens Ferrostaal future
Confusion over IPIC request for more money to prop up plant giant
Abu Dhabi’s IPIC (International Petroleum Investment Company) is urging MAN to pump $50m into Ferrostaal, the German plant company they both currently own.
According to IPIC, Ferrostaal needs a temporary loan of $170 million to cover the next three months of bank loans as it struggles to shake off allegations of corruption stretching back to when it was still wholly owned by MAN.
Currently IPIC has a 70% share and MAN a 30% share of Ferrostaal, with the Abu Dhabi wealth fund refusing to buy-out the truck maker while investigators trawl through evidence dating back to the 1990s.
IPIC claimed that the two companies had agreed to meet at the end of the last week to discuss the loan.
However subsequent reports in Germany said that the offer was refused by MAN because CFO Hans Lutz was already scheduled at a meeting of the supervisory board on the date suggested, and also that he was reluctant to engage in talks without the participation of IPIC boss Khadem Al-Qubaisi.
"We remain disappointed that MAN does not want to cooperate with IPIC in order to secure the necessary short-term liquidity for this business," IPIC said in a statement. "IPIC cannot be expected to shoulder the financial burden of MAN's past deficient compliance culture. We look forward to meeting MAN to discuss this as well as other important topics regarding Ferrostaal's business operations. We hope to reach the necessary decisions in order to support Ferrostaal."
According to Reuters, a spokesman for MAN said that the company’s response to IPIC’s call for funding had been delayed because of a national holiday in Germany, adding that all the company had received was a faxed request to the legal department.
The spokesman also said that MAN was not aware of a meeting being scheduled last week, pointedly remarking that an offer to meet during the summer by MAN was never replied to by IPIC. However the company clarified its still keen to reach an agreement with IPIC over the future of Ferrostaal.
Ferrostaal employ 5,300 people worldwide and is based in the German industrial heartland of North Rhine-Westphalia.
Juergen Hahn, a Ferrostaal board member, told local press that the company is dependent on the supports of banks and will find it difficult to operate should it default on loans.
"Our business model is in danger," he said. "We have concerns that the banks demand more collateral in the future before they provide us with a guarantee lines."