BERLIN — While Germany’s financially wracked Kirch Group faces a showdown with creditors this week, reverberations from its troubles have reached the Bavarian state government.
The opposition Green Party has filed a motion demanding an immediate report on how Kirch’s collapse would hit Bavaria.
The heat is on Edmund Stoiber, Bavaria’s minister president and leading opposition candidate for federal chancellor, who has been a longtime supporter of Kirch.
With loans totaling 1.9 billion euros ($1.7 billion), Bavaria’s state-run Bayerische Landesbank is Kirch’s biggest creditor. Green Party officials said a film catalog held by the Landesbank as collateral for the hefty credit line is not worth the $2.6 billion Kirch says it is, but more likely $876 million.
“The state government not only allowed Kirch to ride into this crisis, but also provided a horse to do it on,” said Bavaria’s Green Party chief Sepp Durr.
Rescue plan debated
Meanwhile, corporate troubleshooters, Kirch execs and creditors spent Monday haggling over a rescue plan outlining assets the cash-strapped media giant may sell to refinance its $5.7 billion debt.
A solution may include restructuring plans that would force the company to sell off many of the key assets collected by founder Leo Kirch. Company’s money-losing pay TV operation, which has dragged the group to the brink of bankruptcy, is one likely candidate to go on the block, as is Kirch’s majority stake in Formula One racing.
Kirch has said repeatedly that terrestrial TV station ProSiebenSat 1, the group’s main engine, will not be put up for sale.
Creditors are expected to meet today to decide further steps in what some say is the beginning of the end for the 46-year-old company.
But other media watchers doubt Kirch’s creditors, which include many of Germany’s leading banks and international investment houses, will turn their backs on the group.
“They stand to lose too much if they just let Kirch fall into insolvency,” one local analyst said.
One shareholder, newspaper publisher Axel Springer, caused yet another problem for Kirch on Saturday when it announced it was ready to take Kirch to court for the $675 million it wants back for its stake in ProSiebenSat 1.