Honsel Declares Insolvency, Liquidator Appointed

Honsel AG, a producer of aluminum sand and permanent mold castings, and aluminum and magnesium diecastings, has filed a bankruptcy claim in the District Court in Arnsberg, Germany. The company’s announcement stated that all efforts are being made to ensure that deliveries to customers will proceed without interruption. The court named a “provisional liquidator” for the Honsel assets. The company explained that it had instituted “a comprehensive operative and financial restructuring” in 2009 but that it had been unable to respond to changes resulting from recovery in the automotive sector. It pointed to “quantitative and qualitative problems associated with the ramp-ups of new production lines and existing projects” were largely responsible for its cash shortage. The problems were complicated as its profitability declined. The amount of Honsel’s debt is not indicated. The company admitted that it had been unable to reach a debt-restructuring agreement that would have provided new operating capital, despite extensive negotiations over recent months. “We are convinced that the restructuring of the company can succeed through the insolvency process,” stated Stefan Eck, a spokesman for the Honsel AG board. “Insolvency law allows us to adjust cost structures in order to reshape the company's future under completely new conditions. Considering its culture of innovation and strong market position, Honsel still has good prospects for a successful future." Honsel has a reported 3,800 employees, with its main foundry at Meschede, Germany, performing high-pressure diecasting, permanent mold and sand casting, as well as machining. The plant also has rolling and machining capabilities. Other plants in Germany include a high-pressure diecasting and machining operation at Nuremburg, an extrusion plant at Soest, and a diemaking shop at Nuttlar. Meetings have been scheduled to explain the circumstances to workers at the plants in Germany. Honsel has other high-pressure diecasting and machining shops at Monte Mor, Brazil; Grosbliederstroff, France; Queretaro, Mexico; and Madrid, Spain. The status of those operations is unknown During a financial restructuring in 2009, a Belgian investment group RHJ International (a unit of private equity group Ripplewood Holdings), invested an estimated $70 million in the Honsel Group in exchange for a 51% stake holding, while the remaining 49% remained held by Honsel's senior term lenders. “Over the last year Honsel has incurred significant operating losses,” RHJ announced. “Despite the equity support provided by RHJI in the midst of the economic downturn and considerable efforts by Honsel's management to address operating issues in manufacturing in conjunction with new product launches, Honsel's financial performance remained under pressure and resulted in a liquidity shortfall.” "We regret that in spite of all efforts the company has not been able to turn around its business,” commented Leonhard Fischer, RHJ's CEO.