Behind every billionaire there is a story!

Merckle Wins Time to Rescue VEM Unit

VEM Vermoegensverwaltung GmbH the investment unit of Germany’s billionaire Merckle family, won a two-week extension to secure bank financing after wrong-way bets on Volkswagen AG shares and the plunging value of HeidelbergCement AG led to a “liquidity shortage.”A group of about 30 banks signed a so-called standstill agreement that blocks the lenders from making claims, the Dresden- based investment unit said in an e-mailed statement today. The company can now continue negotiations on a bridge loan, it said.

“The banking crisis and turbulence on the financial markets led to a liquidity shortage at VEM,” Ludwig Merckle, head of the company, said in the statement. “The first goal is to stabilize the short-term financial situation. Over the medium-term, VEM must examine all options on how it can reduce debts.”

His father, Adolf Merckle, 74, heads an empire spanning the cement, machinery and pharmaceuticals industries. The elder Merckle made personal guarantees from his $9.2 billion fortune to the banks to try to secure funding, three people familiar with the situation said. VEM lost “low three-digit million euros” on VW stock, and banks demanded more guarantees from the company after shares used as loan collateral declined in value, it said.

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http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6woPVd_IWuk