Erb folds under a mountain of debt
The sprawling Erb group of Winterthur has folded dramatically after running up debts of SFr2 billion ($1.55 billion).
It is the worst company collapse in Switzerland since the national carrier, Swissair, was forced out of business last year. Erb is indebted to around 80 banks.
The secretive Erb conglomerate, which includes the world’s number two coffee trader, Volcafé, and Switzerland’s number two car importer, said it had suffered mainly from bad real estate deals in Germany.
The news came after days of speculation in the Swiss media about the plight of the group.
At a news conference in Winterthur, Erb said it was seeking a new owner for Volcafé, which accounts for almost 15 per cent of the world’s coffee trading.
Volcafé said it was not affected by the parent company’s financial troubles and had plenty of cash to continue trading.
But the future of much of the rest of the group looks bleak after the group put three of its holding companies, including the one that owns most of Volcafé, into creditor protection. A fourth has declared bankruptcy.
The company said that 20 jobs would have to be cut from the group’s total staff of 4,900.
Erb said that while most of its operating companies were doing well, the group had to write down SFr2.5 billion at its Uniinvest Holding, which ran real estate investments in Germany and elsewhere.
Erb said in a statement that the group as a whole was in a tense liquidity situation and was confronted with outstanding liabilities of SFr2 billion, which made it impossible to continue existing in its current form.
At the end of October, the concern appointed a chief executive, Hans Ziegler, to oversee the complex group after the death of 85-year-old founder, Hugo Erb, known as a patriarch who loved hard work.
"Such a structure, with healthy affiliates being pillaged by holding companies, is unique in Switzerland and outside its borders," Ziegler commented at a news conference.
Apart from the group’s interests in coffee and imported cars, it also runs a network of new and used car dealerships, offers financial services, and produces kitchens, windows and doors.
Last year, the reclusive Erb family was estimated by the monthly economics magazine "Bilanz" to have assets worth SFr1.5 to 2 billion.
This year’s edition of the magazine’s survey of millionaires in Switzerland noted that the Erb family had slipped out of the rankings altogether.
The mayor of Winterhur, Ernst Wohlwend, said he was shocked by the collapse of the Erb empire.
"The Erb family was extraordinarily discreet and did not mix in with Winterthur life. The debacle comes as a total surprise for everyone," he said.
swissinfo with agencies
The Erb group had a turnover of SFr4.475 billion in 2002 and a workforce of 4,915.
The import companies (Mitsubishi, Hyundai, Suzuki and Tata) sold 20,073 new cars in Switzerland last year.
Hyundai France, also part of the Erb group, sold 19,228 cars.
The Erb group has collapsed under a debt mountain of SFr2 billion.
Its Achilles’ heel proved to be real estate investments in Germany and elsewhere.
The Uniinvest Holding has been put into bankruptcy. Three other holding units (Herfina, Uniwood and Unifina) are seeking protection from their creditors.
Erb is seeking a buyer for its Volcafé trading company in which it has a 15 per cent stake.
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