Chipmaker Infineon is reportedly in talks with the German government on receiving several hundred million euros in state guarantees for a 900 million euro bond issue that will help the company out of its current woes.
While the economic downturn has hit the demand for semiconductors, which is expected to fall further this year, the company is reported to be preparing a plan to see it through the economic crisis.
The plan will help the company refinance more than € 900 million worth of corporate bonds and other credits by June 2010. It needs to a decision from Berlin by July.
The downturn has hit the sales of personal computers and mobile phones, that are the mainstay for chipmakers; sales of these products are expected to be down 12 to 10 per cent respectively this year.
However, there are indications that things may be looking up for the company. The company returned from short time work to normal schedule at its Dresden facility on higher utilisation. Some investors believe that the worst may be over for the company with the stock price having tripled over the past weeks.
The company declined comment on reports that it approached the German government for state aid to help it weather the crisis.
The Munich-based company, Europe's second-largest maker of semiconductors, has been listed in the TecDAX index since 5 March. The company was on the benchmark DAX index before it fell out of it because of a sharp decline in share prices which are down 30 per cent in the past six months.
According to reports, Infineon has asked McKinsey & Co to develop a business plan to pull the company from the brink. Consulting firm Roland Berger has been asked to draw up a financial plan the reports added.
Chancellor Angela Merkel's government has made a provision of € 100 billion euros in credit and loan guarantees to German companies. This includes 25 billion euros in loans from Frankfurt-based KfW Group, the state-owned development bank.