German contractor Philipp Holzmann, which was on the brink of receivership after losses of up to $1.3bn, has been bailed out by the German government. A credit guarantee of $52.8m and a $80m ‘mezzanine’ credit has been offered by the Kredietanstalt Für Wiederaufbau, a government bank.
The EC is to investigate the bail-out as it had not received a request for approval from the government, which is deemed to be necessary. Although not normally a major issue, clearance can be given within a short period of time, but if negotiations between the bank and the company are complicated, approval could take weeks.
Current Holzmann management blames the ‘criminal negligence’ of previous management for build-up of the insurmountable $1.3bn debts.
The government has been pressurised into the situation of preventing Holzmann’s closure because unions said that 70 000 jobs were in the balance.
