BERLIN — As Germany’s financially troubled Kirch Group continues to seek a way out of its dire straits, Munich prosecutors are looking at the role of state-owned Bayerische Landesbank (BayernLB) as the company’s biggest creditor.
Kirch is struggling under a $5.7 billion mountain of debt, stemming largely from its money-losing pay web Premiere World; the broadcaster is planning to lay off 270 employees as part of radical restructuring efforts.
Joachim Eckert, Munich chief prosecutor, said officials were monitoring BayernLB’s activities but has seen no reason to take any action.
With Bavarian Premier Edmund Stoiber revving up his campaign against Gerhard Schroeder for the chancellor’s seat in federal elections later this year, the spotlight is on the Munich-based bank, which provided loans to Kirch of around 1.9 billion euros ($1.7 billion).
Eckert said his office could launch an investigation to see whether BayernLB provided loans to Kirch without making careful checks if it were to turn out that improper valuation adjustments were made by the bank to cover its relationship with Kirch. BayernLB has declined to comment.
Meanwhile, the Bavarian state government, which owns BayernLB, has issued an optimistic assessment of Kirch’s ongoing troubles, predicting the company’s tangled debt situation can be cleared up in coming weeks.
“I am convinced that the good sense of the participants will lead to a solution,” said Kurt Faltlhauser, Bavarian finance minister, adding that he was confident creditor banks would reach an agreement on the debt situation.
Kirch and its banks started negotiations March 11 in search of a mutually acceptable solution to its problems.
Premiere’s supervisory board is due to meet Tuesday to discuss a separate restructuring proposal. Unit plans to shed 270 jobs from its call center operation, and the 2,400-strong workforce is likely to see more pinkslips.
Premiere chief Georg Kofler, who announced radical cost cuts when he took over in February, has indicated he still expects the web to stay in business.
Some reports have said Kirch is increasingly likely to pull the plug on Premiere if an interested investor is not found to save it. The broadcaster is losing an estimated $2 million a day.
Kirch may have better luck selling local stations in Berlin, Munich and Hamburg. Bernd Schumacher, head of Stuttgart-based B-TV, has signaled an interest in acquiring the metropolitan channels for an ad hoc network he’s seeking to launch.