Business News

Prevent Global Files for Receivership (adds)

Slovenj Gradec, 03 August (STA) - The management of Prevent Global filed a request for receivership with the Slovenj Gradec District Court on Tuesday, ending days of speculation about the fate of the troubled car-seat cover maker.

The management had planned to file for receivership already on Friday last week, before the government mounted a last-ditch rescue attempt, which however failed to secure a strategic investor.

Prevent Global chairman Renato Kranjc said on Tuesday that the company can still halt bankruptcy proceedings should it obtain a suitable proposal from an investor.

According to Kranjc, a potential investor would have to inject capital into the company that would allow the payment of pay and current costs. Moreover, it would have to offer a clear vision for short- and long-term operations.

The receivership proceedings endanger 1,260 jobs at Prevent Global and its subsidiary Prevent avtomobilski deli, which produces car seat covers for Volkswagen and Mercedes.

Moreover, a further 1,490 jobs at subsidiaries abroad may also be in jeopardy since these companies will be made part of the bankruptcy estate once receivership is launched.

However, Kranjc said today that it was realistic to expect that Prevent could continue to operate once receivership is launched. The main question is under what conditions an investor would be willing to assume the healthy cores of the company.

After hearing of the news, the workers of Prevent Global and Prevent avtomobilski halted the strike they started on Monday over unpaid wages.

The strike has been frozen pending a decision on receivership, trade unionist Vlado Zorman told the STA. Meanwhile, the workers have been put on leave for the time being.

The development comes after a slow, two-year decline of the once formidable company that started with a battle for control between the two key owners, Janko Zakersnik and Nijaz Hastor in late 2008.

In recent months, Hastor, who owns 45% of Prevent Global, has moved production to other companies in his ownership. Hastor is the owner of Prevent Global's sole client, German company Prevent DEV.

The debt of Prevent Global to banks amounts to EUR 52m. Last year the company generated revenues of EUR 42m, making a loss of EUR 7m.

Coupled with the economic crisis and shrinking order books, the power struggle pulled the company ever deeper into the abyss.

The Labour Ministry responded to the news of receivership at Prevent by announcing measures to help the workers who will lose their jobs. The ministry will initially provide financial aid, after which the workers will be included in employment retraining programmes.

Meanwhile, charities Karitas and Red Cross Slovenia announced they have started handing out food kits and collecting donations for workers of Prevent Global.

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