Lixil Group Corporation could face $337million of losses
Lixil Group Corporation faces around JPY 41bn ($337million) losses after Joyou AG, which is listed on the Frankfurt Stock Exchange, filed an application for insolvency proceedings with the local court of Hamburg, Germany.
It follows the over-indebtedness of Joyou AG, having to writing off $300millionUSD on guarantees given to creditors of Hong Kong Zhongyu Sanitary Technology Limited (Joyou Hong Kong).
The Joyou supervisory board announced on April 27 that is had ordered a special audit and and CEO Jianshe Cai and chief operating officer and chief marketing officer Jilin Cai were suspended from their positions.
On May 3 Joyou announced in Germany interim results of its current audit at subsidiaries of Joyou AG showed there were substantial deviations in revenue, amount of indebtedness and available cash compared to the amounts reported by Joyou in 2014.
Following this, the management board of the Joyou AG decided on May 21, 2015 to file an application for the opening of insolvency proceedings. A preliminary insolvency administrator will be appointed by the local court in due course.
Jouyou AG has since removed Jianshe Cai and Jilin Cai from their positions and is considering “comprehensive legal actions against them”.
Jianshe Cai established the family business in 1979 which grew into the Joyou brand and in 2009 Grohe invested in the company as a strategic partner. In 2011 Grohe bought control of Joyou AG and launched into the UK market in 2012.
The Grohe Group was taken over by Lixil Group and the Development Bank of Japan in January 2014. Grohe and Joyou remain independent with the Lixil Group.
Lixil is currently working with Joyou to establish facts relating to the financial information before calculating the financial impact and publishing its annual financial report for the year ended March 31, 2015.
Senior vice president public and investor relations of Grohe Holding Dr.Ulrike Heuser-Greipl commented: “Grohe Holding GmbH, Grohe AG and their subsidiaries are an independent subgroup of Grohe Group S.à r.l. and therefore not at all affected by insolvency proceedings at Joyou AG.
“Also, the financing of Grohe Group S.à r.l. and its Grohe subsidiaries is not affected by the insolvency proceedings at Joyou AG. Grohe Holding GmbH and Grohe AG are financed separately by independent long-term loans.”