Banks give Pfleiderer debt repayment reprieve

Panel products giant Pfleiderer AG has been givien some breathing space after signing a “standstill” agreement with its banks on debt repayment.

In November, the company, the world’s second largest producer of particleboard and fibreboard, admitted it was in danger of breaching lending agreements unless there was a sustainable improvement in markets.

Now Pfleiderer’s banks have agreed to the suspension of the company’s contractual debt repayment until March 31, 2011. Furthermore, they have also agreed not to exercise any right to terminate their credit lines due within this period.

During this time, Pfleiderer will develop an overall concept to allow it to undertake restructuring and to have funds available to make investments in key growth markets.

“The standstill agreement is a vote of confidence by the banks in our restructuring process, and all the more so since their approval was unanimous,” said chairman Hans Overdeik.

Pfleiderer, which has debts of €914.5m, has had to cope with a sales decline and excess capacity in its core business in western Europe and North America.