Thyssenkrupp No Longer Eying State Aid Via Emergency Fund - CFO

FRANKFURT: Thyssenkrupp is no longer pursuing aid for its struggling steel division via an equity injection by Germany’s economic stabilisation fund, the conglomerate’s finance chief told Rheinische Post in an interview.

The WSF fund set up by the government to bail out stricken groups in the wake of the pandemic is “not the proper instrument” to support the unit with equity, Chief Financial Officer Klaus Keysberg said.

Ruling out this form of state aid came after intensive examination and discussions with the German government as well as the leadership of the state of North Rhine-Westphalia, where Thyssenkrupp is based, he added.

Keysberg said that costs under that scenario – which would most likely include the government taking a direct stake – could seriously threaten the steel division’s future prospect.

“This would have led to significant and continually rising annual interest payments that could account for around 9% of the overall aid. This cannot be met by the cash flow of the steel business.”

The news deals a blow to the powerful IG Metall union that has pushed for state participation as a way to rescue the business, which made an operating loss of nearly 1 billion euros ($1.2 billion) in the past financial year.

Thyssenkrupp earlier this year put its steel business under strategic review, with scenarios including a full or partial sale as well as a possible government stake.

Britain’s Liberty Steel has submitted a non-binding bid for the division and Thyssenkrupp has also held talks with India’s Tata Steel, Sweden’s SSAB and Germany’s Salzgitter about potential consolidation.

The stricken conglomerate plans to decide in March on whether to sell or keep the division.

“We also see significant value potential for our steel business in the stand-alone scenario,” Keysberg said.

($1 = 0.8258 euros)

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

Read all the Latest News, Breaking News and Coronavirus News here