Holzmann To Dispose Of Property Assets

Holzmann made losses of DM443 million in 1995, and whose revenues fell 4.6 per cent to DM5.9 million in the first half of 1996. It said a buyer had already been found for some 4,000 flats and it expected a contract to be signed this month. The flats, which are mostly in Berlin and Bonn, have been valued at DM500 million.

With the sale, Holzmann will withdraw from its business as a landlord. Further disposals over the coming year could raise a total of DM2 billion, the company said.

This represents about 60 per cent of our projects which have either been completed or are currently under construction, it said.

 

The companys prime goal was to reduce its burden of debt, which at the end of last year totalled DM6 billion.

Receipts from the sales would help offset the costs of restructuring. Twenty-six loss-making subsidiaries are to face radical restructuring. These include Holzmanns foreign units Nord France, Philipp Holzmann Oesterreich, an Austrian company, and Hillen & Roosen, a joint venture in the Netherlands.

Closer to home, the groups road construction business, Deutsche Asphalt, and two of its subsidiaries in eastern Germany have also been identified as loss-makers.

Until recently the construction sector has been the driving force of recovery in eastern Germany. But following a harsh winter, business in the east has slowed markedly this year as enthusiasm and money for development has dried up.

In the course of restructuring, Holzmann said it would not shy away from measures that would dent sales.

The aim was to concentrate on areas where the companys subsidiaries could satisfy three criteria: position in the market, return on equity and a return to profit within the next two years. Cuts in operating costs are expected to generate savings of DM40bn-DM50bn. Staff at Holzmanns Frankfurt headquarters will be reduced from about 800 to 250. Holzmann accepted that bad management was as much a cause of the companys present problems as overall market conditions. There has been speculation in the German press that Mr Lothar Mayer, chairman, will be forced to stand down. Hochtief, a rival construction company and Holzmanns largest shareholder, is still in the process of trying to mount a hostile bid for the company, in spite of opposition from the German cartel office. Hochtiefs appeal is due to be heard at a court in Berlin in February.