Loewe clarifies move to insolvency and says it has received formal offer from a new investor
Loewe has today confirmed it has received a formal written offer from an external investor and is now moving into the final phase of negotiations to secure its future. It expects to be able to announce further details shortly.
“This means we have reached a crucial milestone that will put Loewe firmly back on track for success,” says Matthias Harsch, Loewe’s Executive Board Chairman.
"A new investor is the latest building block which, together with the strategic relationship with Chinese company Hisense, will deliver a very exciting roadmap of products due in 2014," the company says.
Loewe has issued a lengthy statement today clariifying its current financial situation following reports yesterday that it had moved into an insolvency process.
"Following the three-month period of 'Schutzschirmverfahren' – a form of creditor protection under German law – Loewe has moved seamlessly into a self-administration insolvency process known as Insolvenzverfahren in Eigenverwaltung," the statement says.
"This is a pre-planned phase of Loewe's ongoing re-structuring process, allowing further time to complete its strategic realignment and secure new investment. During this phase, and before the end of this month, Loewe expects to reach an agreement with an investor."
Matthias Harsch, CEO of Loewe AG, adds: "We have a number of offers from investors, from which we will choose in the next four weeks."
In the meantime, the business remains fully operational and the restructuring process initiated by the Executive Board continues unchanged. The company's banks and the Bavarian state Government continue to support the restructuring of Loewe as a new investor is signed up.
"Loewe's business will remain fully operational and Loewe will continue to fulfil all of its obligations," says Harsch. "This also applies to warranty processing, service and uninterrupted availability of merchandise."
Loewe says that its new product rollout continues, with new TV and audio products still scheduled for launch in the final quarter of 2013 and into 2014.
"With the recently agreed strategic technology partnership with State-owned Chinese company Hisense making good progress, a dramatically reduced cost base and a robust new strategy, Loewe looks set for an exciting new future."
In another sign of the turmoil in the TV market, German high-end TV manufacturer Loewe today moved into a self-administration insolvency process and is urgently seeking a new investor to secure its future.
The firm's chief executive Matthias Harsch told Reuters that Loewe has enough cash to continue operating until the end of this year, but if it fails to find a new investor by then "it would be over".
Back in July Loewe filed for creditor protection in Germany, similar to invoking Chapter 11 in the United States. At the same time, Loewe formed a joint strategic partnership with Chinese consumer electronics manufacturer Hisense.
Harsch says the company, founded 90 years ago in Berlin, has six bids from outside investors and hopes to choose one in the next month.
Intense competition and price erosion in the TV market left Loewe nursing a 39 per cent sales slump in the first half of this year, resulting in a net loss of €26.7m (£22m). Loewe is not alone: yesterday, Toshiba announced it will lay off half the staff in its loss-making TV division (around 3000 jobs) and close two of three TV plants outside Japan.
Falling profits at Philips forced it to enter into a joint venture with Chinese firm TP Vision in 2011, Hitachi has closed its last TV plant in Japan, and Panasonic and Sony have had to restructure their TV divisions to stem mounting losses.
By Andy Clough