Thyssenkrupp steel faces a $1.4 billion funding shortfall in its planned separation from parent

The supervisory board chair of Thyssenkrupp’s steel division said that the company needs an additional 1.3 billion euro ($1.4 billion) to cover costs beyond what its parent was willing to pay as part of a planned separation.

Sigmar Gabriel said, after a supervisory meeting of Thyssenkrupp Europe (TKSE), that an external audit will be conducted to determine the unit’s restructuring and financing needs. He added that this could occur before the end of the year.

Gabriel said that the board will reconvene to continue their discussions on August 29 and that Friday's meetings only marked a step in the separation of TKSE Thyssenkrupp AG. The parent has been pursuing this effort for years.

Daniel Kretinsky of the Czech Republic, a billionaire who closed a deal last week to purchase 20% of TKSE is also present at the meeting. He has been in discussions to buy another 30% and eventually form a joint venture 50:50 with Thyssenkrupp.

Gabriel stated that there was no agreement reached between the management of the steel unit and the owners of the division about how to close the funding gap, or if the gap was even so large. He added the external audit planned was intended to provide clarity.

Gabriel explained that "this will not... be an official decision which everyone would have to follow, but, rather, an impartial assessment by auditors on the basis of what we hope to come to an understanding."

Gabriel stated that TKSE had reached an agreement with Thyssenkrupp AG to establish a funding agreement to cover the next 24 month period to continue the operations of the steel division beyond the end September when a dominance agreement ends between the two sides. Reporting by Christoph Steitz, Tom Kaeckenhoff and Emma-Victoria Farr; editing by Jonathan Oatis and Emma-Victoria Farr.

(source: Reuters)