LÄNNEN TEHTAAT PLC STOCK EXCHANGE RELEASE July 28, 2004 at 10;10 a.m.
MACHINIUM LTD AND ITS SWEDISH SUBSIDIARIES FILING FOR BANKRUPTCY,
SECOND QUARTER PROFITS OF LÄNNEN TEHTAAT DOWN BY EUR 4 MILLION
Machinium Ltd, the parent company of the earthmoving and materials
handling division, and its Swedish subsidiaries SMA Construction AB
and SM Maskin AB, and SMA Maskinuthyrning AB, a subsidiary of SMA
Maskin AB, have today filed for bankruptcy. Suomen Rakennuskone Oy,
which is owned by Machinium Ltd, and its Baltic subsidiaries will
continue their operations and every effort will be made to find a new
owner for the companies as soon as possible.
The ownership of Machinium Ltd is divided between Lännen Tehtaat plc
(about 60%), Forenvia Venture I Ky and SFK 99-Fund Ky (between them,
30%), and other minority shareholders(10%). Net turnover of the
companies filing for bankruptcy came to EUR 48 million in the year
ending at December 31, 2003. On June 30, 2004, the companies had debts
amounting to EUR 39 million, of which EUR 6 million were intra-company
subordinated loans. At the same time, the companies employed a staff
numbering 197, 195 in Sweden and 2 in Finland.
During the past two years, Lännen Tehtaat has been actively in its
search for an ownership basis for Machinium that would have enabled
the group to continue operations. However, despite considerable
efforts, it has proved impossible to find a solution.
The Finnish and Baltic companies of the Machinium Division have been
constantly in the black. The sale of the business operation of the
profitable Suomen Rakennuskone and its three Baltic subsidiaries had
already been launched before the bankruptcy and the aim is to have the
sales process concluded as quickly as possible despite the bankruptcy
of the parent company. The business operations of Lännen Engineering
Oy, a Loimaa-based company of the Machinium group were sold to Lännen
Tractors Oy in May 2004.
The Machinium Division was set up in 1999 by incorporating the
earthmoving machinery division of Lännen Tehtaat and SMA Maskin, a
Swedish company acquired by Machinium, into one group. The
profitability of the Swedish companies has been weak and despite a
number of restructuring and cost-cutting rounds, the companies have
remained in the red. SMA Construction AB, in particular, has seen its
losses grow during 2004. The combined loss of the Swedish companies in
the period January 1 June 30, 2004 totalled EUR 2.5 million (1.8).
The liabilities resulting from the bankruptcy of Machinium will cause
Lännen Tehtaat an estimated loss of EUR 4.0 million, which has been
entered into the results of the second quarter. As a consequence of
the bankruptcy, the Lännen Tehtaat Group will see its consolidated
balance sheet shrink by EUR 30 million. The exit from Machinium is
estimated to increase the equity ratio by 4 per cent, while at the
same time the annual consolidated net turnover of Lännen Tehtaat will
be cut by EUR 90 million.
The Machinium group has accumulated losses of about EUR 13 million
between 1999 and 2004. After the minority share has been deducted from
the total, the share of Lännen Tehtaat is about EUR 7 million.
The principal operating sector of Lännen Tehtaat is the food industry.
In 2003, consolidated net turnover amounted to EUR 492 million, and
the Group made a profit of EUR 6.7 million. At the end of the year,
Lännen Tehtaat had capital and reserves totalling EUR 95 million.
LÄNNEN TEHTAAT PLC
President & CEO
More details: Erkki Lepistö, tel. +358 2 8397 4001