The working capital loan will be granted by core banks of Leoni AG at standard market conditions. The guarantee covers 90 percent of the working capital loan which runs until December 31, 2022. The loan agreement will be concluded in a timely manner.
"The new working capital line will create financial leeway to ensure the continuation of business operations and to finance the Group through to the end," said Leoni, adding: "This step has become necessary because most of Leoni's key customers have temporarily restricted their production due to the Covid-19 pandemic and Leoni has therefore temporarily suffered significant declines in sales volumes.
In parallel with the application for the federal-state large guarantee, the recently confirmed remediation report was updated to take into account the possible effects of the Covid-19 pandemic on the company. The updated expertise, which will be formally issued after the working capital loan has been signed, confirms with the additional financial liquidity the company's ability to be restructured and fully financed until the end of 2022.
During the term of the guaranteed working capital loan, Leoni has committed itself in principle to the retention of any net income for the year and thus to a de-facto suspension of dividend payments.
Leoni's Board of Management is continuously assessing the situation and the development of the Covid-19 pandemic. It has already implemented a number of measures to ensure the continued existence of business operations against the background of declining sales of many customers and products caused by the Covid-19 pandemic. These include temporary plant closures in Europe, North Africa and America and the introduction of short-time working in Germany, as well as similar measures at other European sites.