German Construction Sector Crisis Deepens

Walter Bau, the third-biggest German construction company, said on Tuesday that it was filing for insolvency after failing to agree with its creditors on financing. The failure comes three years after the spectacular collapse of German construction giant Philipp Holzmann. The insolvency announcement sent Walter Bau shares into a nosedive on the Munich stock exchange. "We see insolvency as the last chance to save large parts of the company and jobs," Walter Bau said. The group which employs nearly 10,000 people, had presented its 27 creditor banks with a new restructuring plan last month, which entailed €150 million ($196 million) in divestments and stringent cost-cutting of up to €60 million per year. In return, the building company hoped to convince all of its creditor banks to extend a €200 million credit line and a €1.5 billion loan guarantee. But while the majority of the banks creditors had supported the restructuring plans, some thought the restructuring did not go far enough and demanded additional belt-tightening.