Thyssenkrupp in talks for at least 5 billion euros in steel aid
2020-11-10 11:00:33 [Print]
Thyssenkrupp AG is in talks with the German government over an aid package for its struggling steel unit worth at least 5 billion euros ($5.9 billion), well exceeding the group's current market value.
Chancellor Angela Merkel's government has signaled a willingness to provide financial support to shore up the unit and ensure future domestic production of an environmentally friendly form of steel, according to people familiar with the matter.
While a wide range of aid is still being debated, the steelmaker and politicians are exploring about 2 billion euros in liquidity from a government fund and at least 3 billion euros in grants, said the people, who cautioned the amount is fluid and could still change considerably during the negotiations.
Once synonymous with German industrial prowess, Thyssenkrupp is fighting for survival. The pandemic intensified deep-seated structural issues at the company, which still employs more than 100,000 people. Its steel division faces severe problems, with profitability hammered by yawning pension deficits and cheap steel imports from Asia.
The government is ready to offer grants equivalent to about 30% to 40% of the 10 billion-euro transition to fossil-free steel under a hydrogen-development program, said one of the people, who asked not to be identified because the talks are private.
In addition to money for the green-steel project, Thyssenkrupp is also in talks with the government's WSF fund, which was set up earlier this year to rescue companies from a pandemic-induced liquidity crunch. The discussions are aimed at helping stabilize the business by covering losses of about 2 billion euros and more funds might be needed, the people said.
The complex talks also involve Thyssenkrupp's home state of North Rhine-Westphalia. There are differences over the total package and how it would be structured, with the government seeking to minimize the use of WSF funds as much as possible, the people said.
There are formidable obstacles for tapping the money because of long-running issues at the company, and no final decision has been reached, they said.
Chancellor Angela Merkel's government has signaled a willingness to provide financial support to shore up the unit and ensure future domestic production of an environmentally friendly form of steel, according to people familiar with the matter.
While a wide range of aid is still being debated, the steelmaker and politicians are exploring about 2 billion euros in liquidity from a government fund and at least 3 billion euros in grants, said the people, who cautioned the amount is fluid and could still change considerably during the negotiations.
Once synonymous with German industrial prowess, Thyssenkrupp is fighting for survival. The pandemic intensified deep-seated structural issues at the company, which still employs more than 100,000 people. Its steel division faces severe problems, with profitability hammered by yawning pension deficits and cheap steel imports from Asia.
The government is ready to offer grants equivalent to about 30% to 40% of the 10 billion-euro transition to fossil-free steel under a hydrogen-development program, said one of the people, who asked not to be identified because the talks are private.
In addition to money for the green-steel project, Thyssenkrupp is also in talks with the government's WSF fund, which was set up earlier this year to rescue companies from a pandemic-induced liquidity crunch. The discussions are aimed at helping stabilize the business by covering losses of about 2 billion euros and more funds might be needed, the people said.
The complex talks also involve Thyssenkrupp's home state of North Rhine-Westphalia. There are differences over the total package and how it would be structured, with the government seeking to minimize the use of WSF funds as much as possible, the people said.
There are formidable obstacles for tapping the money because of long-running issues at the company, and no final decision has been reached, they said.
