Six month trading figures published by Kinowelt on Friday evening (Aug 31) after the stockmarkets closed served only to heighten film industry and finance sector speculation about the possible insolvency of the stricken German distributor.

In Venice several sources claimed to have knowledge of a bankruptcy announcement within the next days. The Financial Times Deutschland reported similar concerns among the banking community and a six to ten day deadline for the successful conclusion of emergency talks between banks and the company concerning the conversion of short term debt into long term loans. The amount of debt concerned differs according to the sources; Kinowelt speaks of $187m (DM400m) while analysts talk of $273m (Eu300m). The banks are also understood to be urging Kinowelt to find an outside investor that would buy into the company and assume a significant chunk of the debt.

In an official communique accompanying the results Kinowelt co-CEOs Rainer and Michael Koelmel said that "the Kinowelt Media Group can operate successfully in slimmed-down form," but acknowledged the knife-edged nature of talks with banks and investors, saying: "the survival of the company is not assured".

They admitted that the half year financial results were well off their own targets. Pre-tax losses amounted to Eu196m and net income minus Euro 194m as of June 30, 2001 "[The company] had only limited success in reaching the targets set for the first six months of 2001."

Its licence trading division saw turnover down 62% to Eu17.9m, a situation it balmed on the cointinued reluctance of broadcasters to buy from its film catalogues. Turnover at the cinema distribution and exhibition operations rose 43% to Eu44.3m as a result of the takeover of seven Hoyts cinemas, but operating losses increased from Eu600,000 to Eu5.2m. Kinowelt said that it now plans to sell the cinemas. Group turnover stood at Eu119m - 6.2% lower than for the same period last year - which it blamed on the licensing divsion and the deconsolidation of the now bankrupt merchandising firm Braemier.

Talk of bankruptcy on Friday pushed the shares to a new low of Eu0.73 each.