26 April 2013 10:08 [Source: ICB]
Acrylic fibre producer Montefibre Hispania has filed for preconcursado protection with the courts of Barcelona after negotiations with its creditors failed, parent company Montefibre Group said in a statement made in Italian on Tueday 16 April.
Under Spanish insolvency law, a preconcursado agreement is a protection measure for companies at risk of insolvency. The agreement, made on 16 April, will protect Montefibre Hispania for four months to allow it time to renegotiate its finances with its creditors and avoid insolvency, according to a statement from the Mayor of Miranda de Ebro, Fernando Campo, on 17 April evening.
The company filed at courts in Barcelona for the protection
WORKING CAPITAL LIMIT
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 April, but production beyond that would have to be suspended until it could raise additional capital.
ACN spot prices fell by 10-11% in the four weeks prior to 19 April because of weak demand and falling feedstock costs. Spot prices were trading at $1,700-1,750/tonne CIF (cost, insurance and freight) W (western) Europe in the week ending 19 April.
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.
According to local media in Spain - including El Correo - production would be suspended on either 23 or 24 April. Montefibre Hispania refused to comment on the situation and Montefibre Group were not immediately reachable. The press release from Montefibre Group on Tuesday 16 April said that production at the plant would be suspended "imminently," but an exact date was not given.
There had been speculation 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 covered 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.
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