Pfleiderer Sees Possibility of Credit Breach

Neumarkt, Germany, Nov. 12, 2010 -- Pfleiderer, the world’s second biggest producer of chipboard and fibreboard, says it could be in violation of its lending agreements unless its sales improve.

In its earnings report, in which the company said that operational losses doubled in the quarter, the firm said, "We do not exclude the possibility that if there is no sustained improvement in the market situation, we may be unable to fulfill the financial covenants agreed upon with the banks in the future, and may have to resume negotiations. This would lead to credit lines becoming more expensive or even falling due. In the worst case, it might jeopardize the company’s continuing existence. We assume, however, that also in that case, we will be able to reach an agreement with the banks once again on the continuation of our financing."

Pfleiderer, whose business includes the Pergo flooring brand, currently has debts of €914.5m.

It does not forsee any significant recovery of the raw chipboard market in the short term.

“An additional factor is that the economic situation in North Amercia has not developed in line with our exectations,” it added.