By Louise McHenry, ERJ Staff
London - India's Ruia Group claims its agreed purchase of Meteor Gummiwerke fell through as the financial situation of Meteor was â€œdramatically worse than described by sellers,â€ during the selling process.
Last year, ERJ reported that Ruia Group had signed agreements to buy a number of sealing companies including Meteor. But in January 2012, Hildesheim court in Germany appointed a provisional insolvency administrator to the company after Meteor petitioned for the opening of insolvency proceedings on account of â€œimpending insolvency and excessive indebtedness.â€
A spokesman for Ruia told ERJ in a 10 March email that it sent a team to Meteor in December 2011 to analyse the local management's business forecast for 2012. This followed a Euro 5 million injection of capital in October, part of an agreed set of tranches, the spokesman said.
By 25 Dec, Ruia came to the conclusion that numerous assumptions of the Meteor management were apparently based on â€œsevere misinterpretations of the existing business figures.â€
The spokesman claimed that Ruia Group's decision to acquire Meteor was based on false information regarding â€œthe current and predicted situation of the company,â€ and therefore the company had â€œno meansâ€ to prevent the insolvency of Meteor.
ERJ reported last May that Ruia was also to acquire Turkey's Standard Profil and France's Sealynx. The Ruia spokesman said the Standard Profil deal was terminated by the seller, and pointed towards â€œdifferent issuesâ€ at Sealynx but did not elaborate further. In October 2011, an interim administrator was appointed to Sealynx and continues to operate the company as of today. ERJ was unable to contact anyone at Sealynx for a comment.
And finally, German media reported, 7 March, that the Ruia-acquired business Draftex has entered into insolvency proceedings. Ruia claimed that it was made aware of liquidity issues in the company on 15 Jan 2012, when BMW informed it of â€œthe actual situation of the company.â€
Following the alleged non-payment of wages, the spokesman claimed that BMW wrote to the Ruia Group saying that the CEO of the company had â€œtaken advance money from them in December 2011 to pay wagesâ€ and BMW were â€œshocked to see that the wages were not paid.â€
The Indian conglomerate said it gave the CEO a month to put â€œthings in orderâ€ but that transparent information was not forthcoming. Mandeep Khaira, whose role was to investigate the company's situation, replaced him last month. However, the spokesman said that the situation was worse than expected and â€œinsolvency was the best way to restructure the company.â€
Ruia Group added that production did not stop during this time and that OEM supply was unaffected.