Kirch edges closer to insolvency

April 4, 2002 Posted: 3:03 AM EST

Leo Kirch may give up control of debt-laden KirchGruppe

MUNICH, Germany - KirchGruppe edged closer to insolvency on Thursday after creditors and shareholders failed to reach agreement on emergency funding for the debt-laden media group.

Talks broke down when minority shareholders in KirchMedia -- the group's biggest company -- refused to approve a bridge loan of 150 million euros ($131 million), according to reports.

The loan would have allowed the group to keep operating while negotiations continued on a 800-million euro rescue package.

"The ball is in the investors' court," one bank sources told Reuters. "If they call us, we'll listen to new proposals."

MORE STORIES • Profile: Leo Kirch  • Kirch's media empire crumbling

Kirch has been attempting to restructure 6.5 billion euros ($5.72 billion) of debt, much of it built up by KirchMedia, which owns the rights to the 2002 and 2006 World Cup football tournaments and has a majority stake in German broadcaster ProSiebenSat1.

Leo Kirch,75, who built up the group over the past 47 years, has reportedly agreed to give up control in exchange for a continuing interest in the group's World Cup broadcasting rights.

Those involved in the talks include News Corp's Rupert Murdoch and Italian Prime Minister Silvio Berlusconi, who also owns the country's main private broadcaster Mediaset. Both media moguls already have stakes in Kirch.

Sources close to Kirch told Reuters that the group would not file for insolvency until either the banks or the investors admitted the rescue effort had failed.

"There can always be miracles, but the belief in miracles is getting thinner," a German banking source told Reuters. "It could go for another one or two days -- you have to give miracles a chance after all."

Kirch officials could not be contacted by CNN.

Search

CNN.com CNNSI.com CNNfn.com The Web