The chairman of the Basque cooperative group Mondragón, Txema Gisasola, has resigned in the wake of the massive debt problems of its supermarket chain Eroski and the decision to wind up its electrical appliance manufacture Fagor Electrodomésticos last year.
In a statement, Mondragón said its board was setting up a management commitment to draw a new “general framework” for the path the cooperative will taking over the coming years. A new chairman will be chosen once that task has been completed.
The statement quoted Gisasola as “reaffirming the principles of solidarity, effort, competitiveness, technological innovation and commitment to society as the essential aspects of the essence of the cooperatives within the Mondragón group and the pillars of its future.”
Mondragón said the group needed a period of “analysis, reflection and collective debate” on how best to adapt to the global economic crisis.
Eroski on Thursday proposed that the some 30,000 holders of its 660-million euros of perpetual subordinated debt accept a haircut of 30 percent of the nominal value of their holdings and to swap these for a new issue of 12-year bonds and the offer of the repayment of 15 percent of their investment.
Mondragón said the swap proposal was conditional on it first sealing an agreement with 22 creditor banks to refinance some 2.5 billion euros in debt. Eroski believes this process will take about nine months.
Loss-making Fagor Electrodomésticos filed for receivership in November after failing to find the financing needed to service accumulated debts of some 860 million euros and the company is currently being wound up.
The viability of an emblematic company that has been in operation for 50 years was undermined by stiff competition from overseas companies and the economic crisis in Spain.
With 13 plants in 13 countries, Fagor is Europe's fifth-largest electrical appliances manufacturer, with a market share in Spain of 16.3 percent.