MADRID, Oct 16 (Reuters) - Spanish loss-making consumer appliance company Fagor filed for protection from creditors while it tries to refinance its debt, the company said on Wednesday, after suffering a prolonged period of falling sales.
Fagor said in a statement it had begun “negotiations with creditors to reach a refinancing agreement to guarantee its financial stability.”
Under Spanish bankruptcy rules it has four months to reach a deal. Its total debt has risen to 1.1 billion euros ($1.5 billion) according to Thomson Reuters data.
The company, which says it is the fifth largest electrical appliance company in Europe, started warning of liquidity problems in 2009.
Fagor’s annual sales of 1.17 billion euros in 2012 are down by a third since 2007, the year that a decade-long real estate bubble in Spain came to an abrupt end, triggering five years of economic recession or stagnation.
The company had 5,642 employees as of June 30.
The number of insolvencies to end-September in Spain rose 27 percent to 6,582 compared with 2012, according to ratings agency Axesor, as five years of depressed spending and gridlocked lending from banks took its toll across sectors.
Basque Country-based Fagor is part of the Mondragon group, the world’s largest cooperative and long touted as a flexible organisation that could easily adjust to Spain’s economic crisis. ($1 = 0.7406 euros) (Reporting by Clare Kane; Editing by Tracy Rucinski and Elaine Hardcastle)