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FRANKFURT - Thyssenkrupp has secured about 1 billion euros ($1.1 billion) of state aid to tide it over until it receives the money from the sale of its elevator division, two sources said on Thursday, the latest German company to tap government funding.
The loan from state development bank KfW expires at the end of September, one of the sources close to the matter said, adding that the industrial conglomerate was suffering from slow demand for auto parts after carmakers shut down production because of the COVID 19 pandemic.
The sources declined to be identified because the terms are confidential.
Thyssenkrupp agreed to sell its elevators division to a consortium comprising Advent, Cinven and Germany's RAG foundation for 17.2 billion euros in February and is hoping for the money to arrive in June.
Car makers and suppliers have scrambled to shore up their liquidity as car sales in Europe tumbled by more than 50% in March.
Thyssen is joining some of Germany's best-known companies including Lufthansa , Adidas Puma that are taking out state-guaranteed loans as part of the federal government's aid package to deal with the coronavirus crisis.
Pummelled by ill-fated investments, a downturn in the car market, multiple leadership changes and an overly complex group structure that was tackled too late, Thyssenkrupp's shares hit historic lows around 3.2 euros in mid-March.
They have since recovered slightly and were up 0.7% on Thursday at 6.29 euros at 1108 GMT, outperforming the broader stock market, but well off levels above 26 euros reached three years ago.
As part of its restructuring, the company has put other units up for sale such as the Plant Technology division, which builds cement, chemicals and fertiliser plants.
Just before the COVID 19 crisis broke, it also sounded the market for buyers of its steel trading Material Services unit with the help of investment bank Citi, the first source said.
That process has, however, now been put on hold as investors are shying away from acquisitions in the current market environment, the source said.
Thyssenkrupp, state bank KfW and Citi declined to comment.
Handelsblatt earlier reported news of the state aid for Thyssen.
(Reporting by Arno Schuetze and Tom Käckenhoff; Editing by Sabine Wollrab, Madeline Chambers and Josephine Mason)