A German bankruptcy court has sold off Reliance Industries' polyester making subsidiary Trevira GmbH to two local entrepreneurs for an undisclosed amount.
The sale of euro 210-million (nearly Rs 1,465-crore) turnover Trevira was concluded in early August to two German investors, Stefan Messer and Karl-Gerhard Seifert.
They were associated with the management of the company prior to its acquisition by Reliance Industries in 2004, sources said. Proceeds from the sale will be used to clear outstanding liabilities of the creditors of Trevira, with the rest of the funds going to RIL, they added.
"After discounting the liabilities, RIL is expected to receive a premium of about 20 per cent over the Rs 440-crore (Rs 4.4 billion) investment it had made to buy this company," an RIL executive familiar with the development said.
Earlier, a source said Trevira had several million euros worth liabilities to creditors and its turnover shrunk by over Rs 700 crore (Rs 70 billion) in one year. In August, Trevira had filed an application for insolvency with the Augsburg Court in the German State of Bavaria, after its business ran into trouble due to the industrial slowdown in Europe, particularly in the automotive and textile sectors.
Production sites of Trevira in Bobingen, Guben and Zielona Gora in Poland, together with the sales site in Hattersheim and some other sales offices, will be transferred to the new owners by the first week of November. In addition, all registered designs and patents of the Trevira Group will also be transferred to the new owners.
"After the successful sale of substantial parts of the company, the focus will now be on implementing a management-buyout solution for the two subsidiaries in Belgium and Denmark," insolvency administrator Werner Schneider had said in a statement in August.
Earlier, RIL had tried to turn around the company by bringing in Elke Bauerle, a restructuring specialist as its managing director in May. She had joined Trevira from Schultze & Braun, a leading law firm specialising in restructuring, replacing Hemant Sharma who was heading the company since RIL's acquisition in September 2004.
"European textile makers are currently facing a considerable drop in demand for their products, while the cost of production and employment is increasing, even as competition from Asian and eastern European industries is stronger," RIL had reasoned in August, while filing for insolvency.
Trevira, a leading producer of high-end specialised polyester yarn and fibre and a well-known brand in Europe, was a former division of the German giant Hoechst AG.
