Hi all,
First installment: the translation of what MIBA had on the LGB saga. MIBA is the German equivalent of MR, in as much as they have the largest circulation of any MRR mag in Germany (to the best of my knowledge!) and they cover a very wide spectrum of model railroading. Accordingly they have a point of view, too.
MIBA said:
[b]Tactical move or downhill runaway?[/b]The birds - at least the well informed ones - had been whistling it for some time from the roofs of the garden railway buildings: Ernst Paul Lehmann has some financial difficulties. It was nonetheless a big surprise, even for industry insiders, when the news of EPLs insolvency started making the rounds on Sept.18th 2006. What happened?
The lead up was the usual one in such cases; the banks refused to extend any more credit. But to look for the cause of the insolvency strictly in that direction would appear hasty, a banker doesn’t arrive at such decisions just because he got out of bed on the wrong foot one morning.
" We didn’t anticipate that. Would we have known, we wouldn’t have had a jubilee" commented a EPL media person on Sept. 18th. Known or not - the fact is that EPL sold the American distributor LGBoA back in April, without the knowledge of the creditors. That didn’t improve the trust, one of the essentials in business relationships, between the lenders and EPL.
The trigger was Sparkasse Nürnberg (Nürnberg Savings Bank) who sold their holdings of the EPL credit notes. The discounts, quite likely exceeding 50%, are such that a creditor considers it a last resort since he doesn’t anticipate the borrower to repay even that amount. This raised the red flag at Deutsche Bank in Frankfurt - EPLs major lender - who as a result tried to influence the resulting proceedings in a major way.
The “remote control” from Frankfurt was apparently not to the liking of the personally liable partners Rolf and Johannes Richter. Declaring insolvency seemed a viable alternative: The Administrative Court Nürnberg ordered a provisional insolvency trusteeship and designated Dr. Steffen Goede as the interim trustee. Should this calculation be correct, it could at least lead to a local i.e. job preserving solution.
“Interested investors get a chance to participate in EPL” was the comment the following day on the www.lgb.de website, while simultaneously one could read on the LGBoA website “that decisive steps were taken to forestall a hostile takeover of the family enterprise”. Understandably one would like to pick one’s own “Locust”. At press dead line there was no suitable investor in sight…
If one extends the analysis of the situation past the strictly immediate time frame, one will have to pose the question if the hitherto responsible management always knew what the customer was looking for. Did the product line really consider the USA market (at one time 60% of the turnover)? Were the prices appropriate in view of the strengthening competitors? Needed the construction of the models, in view of the local job costs in tool making and assembly, really be that complex (anyone who ever installed a decoder in a LGB product knows what we mean)?
Not all of these question need necessarily be answered with “Yes”. One hopes that the insolvency trustee will find a solution that allows for the continued existence of both the company and the local jobs. The product line LGB - a pioneer in the 1:22.5 field - would certainly deserve it.
Martin Knaden