KMT initiates trade union negotiations relating to a closure of Herber

KMT has today announced its intention to initiate and carry out the statutory codetermination negotiations (MBL) with the trade unions relating to the closure of KMT’s subsidiary Herber. Despite significant efforts in product development and sales, Herber still has an unsatisfactory order intake and has not been able to turn the negative trend.

On Thursday, KMT’s Board of Directors reached a decision to immediately initiate and carry out the trade union negotiations according to Swedish worker participation legislation relating to the discontinuation of Herber’s operations. Herber, based in Värnamo, Sweden, provides advanced machines and system solutions for cold tube forming. The company, which has been loss-making for a number of years, has not been able to turn the negative trend. KMT has investigated other possibilities for Herber, but these attempts have so far failed.

The objective is that the operations will be discontinued as soon as the trade union negotiations are completed, which is expected to take place during the first quarter of 2007. The planned closure affects about 40 employees.

The extraordinary costs for a closure are estimated to about SEK 30 million, of which about SEK 15 million is estimated to burden the cash flow. The costs for closure will be reported in the financial accounts of this year, and is estimated to negatively affect the earnings per share in 2006 by approximately SEK 2. The Group’s balance is estimated to decrease by some SEK 25 million.

Lars Bergström, President and CEO, said: “I regret this development, but after many years of substantial losses, and despite significant efforts to turn the situation around, we have unfortunately reached the point where we have to plan for a closure of Herber. At a closure we intend to cooperate with the City of Värnamo and the County Employment Board (Länsarbetsnämnden) in order to, as far as possible, find employment for Herber’s staff”.

For more information, please contact:
Lars Bergström, President and CEO, Karolin Machine Tool AB
Telephone: +46 8 594 211 50 or e-mail: lars.bergstrom@kmtgroup.com