Loss-making Basque electrical appliances manufacturer Fagor Electrodomésticos on Wednesday filed for receivership with a commercial court in San Sebastián after failing to find the financing needed to service accumulated debts of some 860 million euros.
In a statement to the National Securities Commission (CNMV), Fagor said its Fagor Ireland subsidiary had also sought court protection from creditors, while other units will do likewise over the course of the next few days.
Fagor on Tuesday rejected the offer of a three-million-euro line of credit offered by the provincial delegation of Bizkaia for its Edesa plant in Basauri. The cooperative holding company Mondragón and the Basque regional government turned down a request from Fagor for funding of 170 million euros to allow it to keep operating. The emblematic company, which has been in operation for 50 years, was hard hit by stiff competition from overseas companies and the economic crisis in Spain
“We regret not being able to count on sufficient funding to continue production and safeguard the interests of employees, partners and creditors,” Fagor general manager Sergio Treviño said.
Mondragón will now have to find alternative jobs for between 1,000 and 1,200 Fagor employees who are cooperative partners out of a total workforce of 5,700.
Fagor has 13 plants distributed in 13 countries. It is Europe’s fifth-largest electrical appliances manufacturer, with a market share in Spain of 16.3 percent. The group posted a loss of 89 million euros on sales of 1.167 billion in 2012. In the first half of this year, it made a loss of 66.8 million euros, after a loss of 22.5 million in the same period a year earlier.
“Fagor has lost a lot of money and the shareholders have had enough,” Bloomberg quoted Javier Santoma, a professor of financial management at IESE business school in Madrid, as saying. “Fagor is a company that has run into problems and most of the shareholders question the wisdom of supporting it.”