Spain's Montefibre Hispania files for protection against insolvency

18 April 2013 12:11  [Source: ICIS news]

LONDON (ICIS)--Acrylic fibre producer Montefibre Hispania has filled for 'preconcursado' protection with the courts of Barcelona after negotiations with its creditors failed, according to a statement from the Mayor of Miranda De Ebro, Fernando Campo, on Wednesday evening.

Under Spanish insolvency law, a 'preconcursado' agreement is a protection measure for companies at risk of insolvency. The agreement, made on Tuesday 16 April, will protect Montefibre Hispania for four months to allow it time to renegotiate its finances with its creditors and avoid insolvency, the mayor said.

Montefibre Hispania produces 95,000 tonnes/year of acrylic fibre from its plant in Miranda De Ebro. It has been running at full capacity.

Nevertheless, a source at parent company Montefibre Group said prior to the filing that the Miranda De Ebro plant has enough working capital to remain operational until the end of this month, but production beyond that would have to be suspended until it could raise additional capital.

According to local media in Spain – including El Correo – production will be suspended on either 23 or 24 April. Montefibre Hispania and Montefibre Group were not immediately available to comment.

There has been speculation in the past week in both Europe and the US that Montefibre Group may permanently exit the acrylic fibre market. Nevertheless, the Montefibre group source previously said that the potential suspension of production concerns only Montefibre Hispania and not Montefibre Group.

Montefibre Hispania is a wholly-owned subsidiary of Montefibre Group.  

Montefibre Group and General Electric have injected €7.5m ($9.74m) of capital into Montefibre Hispania, but this has not been enough to cover its debts, the mayor said.

The mayor went on to criticise five financial institutions as responsible for delaying the refinancing of Montefibre Hispania, which has resulted in the 'preconcursado' protection being necessary.

The mayor added that it has written to the five institutions – which he named as Banco Bilbao Vizcaya, Banco Popular, Caixa Banc, Banco Sabadell and the Institut Catala de Finances (ICF) – urging them to support the company.

“Montefibre does not want to close [the plant]. It wants to ensure that it continues [to operate] and that ...the 362 employees that depend on [Montefibre Hispania] keep their jobs,” the mayor said in Spanish.

The mayor further argued that Montefibre Hispania is a viable business and needs financial help, and that the mayor’s office was as invested as Montefibre Group and the Montefibre Hispania employees in keeping the business operational.

Acrylic fibre is a key downstream industry for the European acrylonitrile (ACN) market, and is the major consumer of ACN spot material.

ACN spot prices have fallen 9-11% in the past four weeks because of weak demand and falling feedstock costs. Spot prices were trading at $1,700-1,800/tonne CIF (cost, insurance and freight) W (western) Europe at the end of last week.

Demand from the acrylic fibre sector in Europe in April remains flat with the first quarter of 2013, which was 30% below the first quarter of 2012, the majority of sources said. European acrylic fibre producers are operating at 50% of capacity in April, according to market estimates. 

Additional reporting by Caroline Murray

($1 = €0.77)

By: Mark Victory
+44 208 652 3214

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