Milk processing company Lucerne Hochdorf has been struggling with financial problems for years. Hochdorf Group is now selling its operating business, ie the production of milk powder and baby food, and is going into debt moratorium. For shareholders, this means that they are likely to lose all the money they have invested. And yet: The sale of the subsidiary Hochdorf Swiss Nutrition AG to the Swiss-British private equity company AS Equity Partners is the best possible solution, according to the management. Assessment by SRF business editor Manuel Rentsch.
Manuel Rentsch
Business editor
Manuel Rentsch is a business editor at Radio SRF. It can often be heard on the SRF 3 Economy show.
Is this the definitive end for the Hochdorf company?
It is the end of the company as it was known before. The holding company – ie the umbrella company – is dissolved, the shares are removed from the stock exchange and the name disappears from business life. The entire production and marketing of the milk powder and baby food products rests with the new owner company. For Hochdorf’s approximately 370 employees, this means that they will have a new employer, but also that production will continue. That is certainly the central good news. However, production at the Hochdorf site will be stopped and will be focused on Sulgen in the canton of Thurgau.
What is known about the new owner company?
AS Equity Partners is a finance company based in London and Zurich. She paid 83 million francs for Hochdorf. That amount is less than the Hochdorf Holdings had hoped for. In the medium term, it must be assumed that the new owners will sell Hochdorf again, for example to another food company, more.
What is left of the Hochdorf Group?
With the 83 million francs, the Hochdorf Group can pay some of its debts, but not all of them. Therefore the holding company is left under legacy financial burdens. But that’s exactly how it was planned. The motto is: Save what you can. That is why the profitable part of the company is now being sold. Hochdorf Holding’s problem is old loans that cannot be repaid. The bottom line is that creditors and shareholders will lose their money.
The shareholders must approve the sale. Is that realistic despite a total loss?
The shareholders have no other choice. There are likely to be isolated protests. But the reality is that they have already lost most of their money anyway. The share price has fallen by 96 percent in recent years. Among those suffering are farmers from central Switzerland who are organized in the ZMP. The Central Swiss Milk Producers Cooperative owns 18 percent of Hochdorf. It is certain that the cooperative now has to write off a large part of this money.