LOAN LIMBO

Deal with the Devil Comes Due

Unister founder Thomas Wagner-Christoph Busse-WirtschaftsWoche
Some say Unister founder Thomas Wagner is playing a waiting game.
  • Why it matters

    Why it matters

    If the loans can’t be resolved, fast-growing HanseMerkur could end up taking over a troubled business it really doesn’t want.

  • Facts

    Facts

    • HanseMerkur tripled revenues over the past 10 years, in part under the leadership of former marketing director Peter Ludwig.
    • Sources say Mr. Ludwig was also behind at least €40 million in loans by the insurer to scandal-plagued Unister Travel.
    • In early 2014, the public prosecutor in Dresden brought charges against Unister chief executive Thomas Wagner, including tax evasion and the sale of unauthorized insurance products.
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    Audio

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Last week, time-honored Hamburg insurer HanseMerkur posted a brief message on its website: High-level manager Peter Ludwig “left the company today,” it announced.

There was no explanation as to why and none of the customary language on company departures: He wasn’t leaving “for personal reasons” or “to pursue new professional challenges,” the message said.

Since then, the insurance industry has been wondering what happened.

The insurer would not comment, and Handelsblatt has been unable to reach Mr. Ludwig.

In the case of a possible Unister bankruptcy, HanseMerkur would risk losing much money and an important sales channel.

HanseMerkur is not just any insurance company; it’s Germany’s most aggressively growing insurer, which has tripled its revenues over the past 10 years.

And Peter Ludwig, 58, was one of the key figures in this development. From 2003 to 2012, he served as marketing director and, during that time, built up the subsidiary HVP Hanse Vertriebspartner. He also assembled a veritable armada of sales teams for private health insurance.

But above all, Mr. Ludwig was the man behind the Faustian deal worth millions between HanseMerkur and the scandal-plagued Unister online travel group.

The insurer is said to be propping up the ailing Internet giant from Leipzig with loans of at least €40 million, or about $44 million. In return, HanseMerkur was apparently allowed to use the Unister portal as a sales platform.

With sites such as ab-in-den-urlaub.de and fluege.de, Unister is one of the largest German holiday travel firms on the Internet.

But loans by HanseMerkur have been due for some time, with no repayments up to now and no arranged  extensions, Handelsblatt has learned from people familiar with the matter. Instead, one insider said everything was “completely in limbo.” Another described the situation as a “genuine showdown.”

HanseMerkur declined to comment on the loans.

But Unister Travel has meanwhile issued a statement: “The refinancing of ongoing loan agreements has been organized and agreed upon for a while.” There is, the statement continued, “no financial pressure situation” arising “from a possible due date of a loan obligation,” it said.

HanseMerkur is said to have numerous pieces of collateral, including rights to brands and domains. Sources say the Hamburg insurer also has the option of transforming the credit into a direct participation in the Leipzig firm. But in doing so, HanseMerkur would assume an entrepreneurial responsibility it never wanted, they claim.

In recent years, Unister has repeatedly been involved in murky affairs; some of its senior managers were taken into investigative custody.

In early 2014, the public prosecutor in Dresden brought charges against the company’s founder and chief executive, Thomas Wagner, as well as other managers. Charges include evasion of insurance tax and unauthorized sale of insurance products. Unister denies the charges.

And now the possibilty of the company being owned HanseMerkur? It’s an unsettling predicament for the insurer, even if judges have yet to decide on bringing charges against Mr. Wagner.

Documents circulating among potential investors indicate that up to €100 million in financing is needed, apparently including a possible increase in capital stock.

What are the alternatives?

In the case of a possible Unister bankruptcy, HanseMerkur would risk losing much money and an important sales channel. In addition, there is a social responsibility and the resulting damage to the insurer’s image. About 1,500 people still work at Unister.

It’s also questionable whether HanseMerkur would be willing to take over operation of individual Unister portals. For now, the Hamburg insurance company is remaining silent about its intentions.

Unister, meanwhile, says “closing requirements are now being realized.”

An inside source said Unister’s chief is playing a waiting game. “Mr. Wagner knows very well that HanseMerkur can’t allow the cart to be driven into a ditch,” the source said.

Documents circulating among potential investors indicate that up to €100 million in financing is needed, apparently including a possible increase in capital stock.

Such a step would not only stabilize the Unister accounts, but also allow new investors to possibly undermine Mr. Wagner’s power, because his shares would be diluted.

It’s questionable, however, whether Mr. Wagner would play along with such a scenario.

Unister hasn’t commented on the specifics, saying only that financial requirements “are scalable” and that its business model “creates by its very nature a great need for capital.”

The company said it has been “engaged for sometime in an open-ended process of seeking a strategic partner.”

In other words, all options are open as intense negotiations between the Hamburg and Leipzig firms continue.

 

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Heinz-Roger Dohms is a reporter at Handelsblatt. To contact the author: dohms@handelsblatt.com

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