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Behind the Scenes of MIFA’s Insolvency

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FRANKFURT, Germany – Yesterday’s happening at MIFA of course spurred a sharp reaction of MIFA’s rating on the Frankfurt stock market. The value of the MIFA shares dropped severely; again.

Behind the Scenes of MIFA’s Insolvency
It’s rumoured that Hero is setting-up a new production plant in India with MIFA know-how as the Indians were able to take a detailed look in the modern MIFA factory when negotiating a deal. – Photo Jo Beckendorff

Since MIFA’s serious problems were communicated in the first quarter of 2014 the rating of the company dropped step by step from the 52-week-high of that time that stood at € 6.9350. The day before yesterday (September 28) the value of one MIFA share was €1.10. After yesterday’s insolvency announcements the rating downhilled to an all-day and 52 weeks low of € 0.61; a value drop of 44.6 percent in one day. The good news: at end of the day the value recovered somewhat to € 0.729.

Open questions

Will the responsible local court in Halle (Saale) consent to the application for self-administration and provide the MIFA management board a preliminary custodian? If so – what decisions will be made? And with whom as interested take-over candidate? To be more precise: what role is Indian Hero Cycles playing from now on?

According to local newspaper reports the financial support Hero intended to give MIFA in return for making the Indian company the majority shareholder, never arrived. What game is played here?

Disturbing rumors

There are already rumours popping up that Hero is setting-up a new production plant in India with MIFA know-how. According to these rumours the Indians were able to take a detailed look in the modern MIFA factory when negotiating about financial support and investments. Whether this is true or not; it will have to be clearly answered as such answers will have a direct impact on the further development of the MIFA share rating as well as the company’s future.

Saxony-Anhalt’s deep interest in saving MIFA

Also somehow trapped in MIFA is the German state of Saxony-Anhalt. When MIFA’s first financial problems were revealed in April 2014 Saxony-Anhalt was swift with its support. In a sale-and-lease-back deal the state bought the MIFA grounds for € 5.7 million. Since then the state received monthly rent from Germany’s biggest bicycle producer. In case MIFA is not saved this rent as well as the financial injection of close to 6 million euro is gone. As it stands now it is very much in the interest of Saxony-Anhalt that this won’t happen and that MIFA with its workforce of 600 stays alive; with or without Hero Cycles or another investor.

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