After meeting with creditors of troubled Philipp Holzmann AG
tonight, German Chancellor Gerhard Schroeder announced to cheering employees that a restructuring plan had been agreed to and that their jobs at the financially strapped construction company had been secured.
Schroeder said that the creditors, which include Deutsche Bank, had agreed on a plan and that the government would ensure that credit for Holzmann would be increased by about $78.3 million. In addition, a surety of $52 million would be made available.
No other details were immediately released.
The excited crowd of several hundred employees in yellow raincoats and construction helmets blew whistles and shouted "Gerhard, Gerhard!" in celebration of the success of the last desperate attempt to save the jobs of 17,000 domestic workers and those at tens of thousands of suppliers.
Meanwhile, Deutsche Bank said 10 of Holzmann's largest creditors have given the company a $52.4 million loan to finance Holzmann's operations in the next weeks.
Holzmann, Germany's second-largest construction company, has failed to agree with bankers on a $1.6 billion bailout. The firm shocked markets a week ago by revealing potential losses of $1.3 billion because of what it termed mismanagement by former executives.
The 150-year-old firm, which built the Reichstag and other illustrious buildings, started insolvency proceedings Tuesday but said it would cancel them if Schroeder's efforts were successful.
Schroeder, under pressure to reduce unemployment in Germany, said Tuesday that the federal government would "use a lot of imagination" to try to help save the firm, but he did not elaborate.
If Holzmann were to collapse, it would have a dramatic impact on Germany's already high unemployment rate. In addition, it might exacerbate a serious crisis of confidence afflicting the world's third-largest economy, which suffers from huge debt and high wage costs that are hobbling its ability to cope with global competition.
Investors have been fleeing Germany because they are concerned that a fatal combination of some of the world's highest taxes and most expensive labor costs and over-regulation hamper their ability to make profits and create new jobs. Many companies now find they can supply the affluent German market by producing in Poland, Hungary or the Czech Republic, where wages are about 80 percent lower.