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United Textiles Restructuring Plan Jeopardised

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The rehabilitation of United Textiles is endangered, as two of the indebted companys five creditors (NBG, Eurobank, Alpha, Emporiki and ATEbank) have not consented to the proposed plan. According to the plan announced by the Greek Finance Ministry, the company is to be financed with 35 million euro, guaranteed by the Greek state.

 

Sources told Capital.gr that the BoDs of these two creditor banks will convene today to decide their stance regarding the financing of the company.

 

United Textiles believes that the hurdles will be overcome so that the 35 million euro loan may be paid and the second stage of the restructuring plan drafted by Kantor consultants may be implemented, according to which the group will return to profitability in 2011.

 

The first stage of the plan called for the unification of subsidiaries, the sale of non strategic assets, cutting job posts, mainly in the Balkans, cutting cost and expanding in new markets. The plan has met with a certain success up to now (losses fell from 90 million euro in 2004 to 40 million in 2007) but EBITDA remains negative (8.9 million euro, down from 20 million euro in 2004), causing the banks to question the whole plan.

 

Banks hardened their stance when the main shareholder, Th. Lanaras, refused to participate with his own capitals in the financing of his company. As a result, the payment of 35 million euro planned for April 2008 froze and has still not been effectuated. Since then, production has fallen, orders are not filled properly and employees have not been paid for May and June.

 

Now Mr Lanaras has been alienated from the company and management has been taken over by Mr Vatistas with the aid of the Greek state, which cannot ignore the 1,172 job posts at stake.

 

The creditor banks of United Textiles hold a key role in the restructuring process, however these are committed to their shareholders and have to be convinced that United Textiles can indeed become profitable. Besides, in 2004 and 2006 they granted tens of millions of euro, which have not born satisfactory results up to now.

 

The company says that with the 35 million euro loan and the settling of old debts, better days will come, since there is a pipeline of orders and the market has overcome the shock of cheap, low-quality Chinese products.

 

The group currently employs 1,688 people in fourteen plants, of which 1,172 are employed in Greece

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