Leica in financial crisis
German website, Spiegel Online, has reported that Leica is in financial crisis after many banks cut its credit lines following an announcement last week, which said it stood to lose half its operating capital. The company, which introduced the first 35mm still camera in 1924, is also expected to close the financial year with an operating loss of €10 million (approx $13 million). Last year it reported a loss of €1.6 million (approx $2.1 million). Shareholders will hold a meeting on May 31 to discuss the future of the company. Spiegel Online says that Leica has missed the boat where digital photography is concerned and it is also suffering due to the low rate of the US dollar versus the Euro.
Following the ad hoc announcement of Leica Camera AG, Solms, of February 17, 2005, stating that the Company expects a loss of half of its registered share capital in March 2005, the banks have partially terminated their credit lines. The remaining lines still cover the current liquidity requirements. The Company's Board of Management has entered into negotiations with the banks on a solution that will carry the Company until the time of its Extraordinary General Meeting on May 31, 2005, at which capital measures are to be proposed to the shareholders.
Leica Camera AG, Solms, expects the existence of a loss in the amount of half of its registered share capital in March 2005. The Company’s Board of Management will make a corresponding announcement according to section 92 (1) of the German Stock Corporation Law (AktG) at a General Meeting to be held on May 31, 2005.
Concurrently, the Board of Management prepares a turnaround strategy. It will propose at the General Meeting on May 31, 2005 that capital measures be taken. In connection with such measures audits are conducted at present. The measures proposed will be announced and published in the designated journals at the time of the convening of the General Meeting and the announcement of its agenda.