Just four days ahead of the presentation of its nine-month figures on November 30, embattled German media concern Kinowelt Medien may now have to file for insolvency after ABN Amro Bank announced its intention to call in loans of more than $45.1m (DM 100m) to Kinowelt as from November 28.
In an adhoc communique, Kinowelt stated that ABN Amro's step "comes as a surprise" and pointed out that the company was not in a position to raise the loans' sum by November 28. If an agreement cannot be reached with the bank at short notice, Kinowelt is likely to have to file for insolvency in order to protect its other creditors. At the same time, it stated that "the [Kinowelt] management is convinced that if this happens, the result for the funding banks will be significantly worse".
Kinowelt has been caught completely off guard by ABN Amro's move because its funding banks had been kept informed in recent months of the group's tightening up of its business operations and the achievement of a positive cash flow and "many of them had reacted positively to the news".
"ABN Amro Bank appears to expect to achieve a higher rate of repayment of its loan to Kinowelt through insolvency procedures", the statement declared. "This opinion is not confirmed by experts consulted by Kinowelt. On the contrary, a large proportion of the loan from ABN Amro Bank NV is not collateralised. The action taken by ABN Amro Bank contradicts all economic considerations and, moreover, endangers many jobs at Kinowelt and its suppliers".
News of ABN Amro's plans sent Kinowelt's share tumbling by over 30% at the beginning of trading on Monday morning (Nov 26).