FRANKFURT (Reuters) – Thyssenkrupp said on Saturday its steel division must be restructured to finance investment needs from its own earnings but the parent company has secured financial security for the next two years.
Thyssenkrupp CEO Miguel Lopez’s comments came after the steel division’s chief said the company needed to plug a 1.3 billion euro ($1.4 billion) financing gap.
Sigmar Gabriel of Thyssenkrupp Steel Europe (TKSE) made the funding suspension late Friday after a supervisory board meeting.
The parent company is reducing its stake in the unit, which is suffering from lower demand and lower prices for steel products.
The purpose of the ongoing turnaround efforts is to enable TKSE to earn enough money on its own to fund its investment needs and weather any temporary downturn in the future, Lopez said.
He also warned against any speculation about bankruptcy.
“Thyssenkrupp AG will secure SteelEurope’s financial needs for the next 24 months. This should put an end to any speculation once and for all. There has never been a risk of bankruptcy and there will never be now,” Lopez said in a statement.
The dispute comes after new investor Czech billionaire Daniel Kretinsky last week completed the purchase of a 20% stake in TKSE and is in talks to buy another 30%. Kretinsky was present at Friday’s board meeting.
Gabriel, a former federal minister, also said on Friday that an external review would be conducted before the end of the year to determine the unit’s restructuring and financing needs.
The audit would help see TKSE in a “sober and realistic” light, Lopez added Saturday.
The sale of TKSE, which is closely linked to Germany’s history as a heavy industrial powerhouse, has been fraught with difficulties for years, mostly because the company needs billions of euros to continue investing and regain competitiveness.