The company employees 6,000 people throughout Europe, including about 500 in Sweden, and is 90 percent owned by the Nordic Capital investment fund.
“Efforts to avoid insolvency have failed. The Plastal board decided today to declare the company insolvent and to seek bankruptcy,” it said in a joint statement with Nordic Capital.
“A judicial administrator will be named quickly by a Swedish tribunal,” they added.
Plastal, one of the largest suppliers of plastic components for European auto companies, counts Ford, Volvo, Daimler, Audi, Volkswagen and BMW among its clients.
“Up until September things were good for Plastal. But since then, things have gone pretty past, along with the financial crisis and the rapid deterioration of the economy which has the auto industry extremely hard,” said Plastal CEO Roar Isaksen to the TT news agency.
“We’ve tried to save and sell parts of the company. We’ve negotiated with the banks and we got a 250 million kronor ($27 million) capital injection from our major owner Nordic Capital in January. But it hasn’t been enough.”
The global financial crisis and credit crunch has crippled the auto industry, with sales tumbling along the production chain from manufacturers to components suppliers and service providers.
“The auto sector is in free fall at the moment. Bankruptcy is the last resort,” Nordic Capital said, adding that it regretted the distress caused for all employees.
Plastal posted sales of €1.3 billion in 2008. Based in Gothenburg, it has 28 plants and four research centres in Europe and two factories in China.
Nordic Capital said all its sites will have to apply for bankruptcy in accordance with local laws.
After the announcement, Sweden’s second largest bank Handelsbanken said it had exposure of up to 2.1 billion kronor ($182 million) to the failed company.
“Most of this debt is backed by Plastal collateral in Sweden and oversees,” it said.
Handelsbanken shares were down 5.2 percent in early afternoon trade while the broader stock market was off 2.6 percent.