HeidelbergCement Drops on Concern Merckle Must Sell

By Sheenagh Matthews and Angela Cullen

Nov. 17 (Bloomberg) -- HeidelbergCement AG, Germany's biggest cement maker, dropped the most in at least 19 years in Frankfurt trading on concern its billionaire owner Adolf Merckle may have to sell shares to help prop up one of his investment companies.

HeidelbergCement fell as much as 18 percent to 41.89 euros, the biggest intraday slide since at least October 1989. A group of more than three-dozen banks, including Deutsche Bank AG and Commerzbank AG, is trying to reach an agreement on a loan to aid Merckle's closely held VEM Vermoegensverwaltung GmbH, battered by wrong-way bets on Volkswagen AG shares and plunging stock markets, three people familiar with the situation said.

A failure could have repercussions for Merckle's holdings, which span as many as 30 companies in the cement, machinery and pharmaceutical industries, said the people. VEM holds about 25 percent of the Heidelberg-based company, and, including holdings by affiliated companies, Merckle controls at least 86 percent in total, according to Bloomberg data.

``Merckle will have to negotiate very skillfully,'' said Heino Hammann, a Hanover-based analyst at Norddeutsche Landesbank, who has a ``sell'' rating on HeidelbergCement shares. ``Getting financing in times like these is really difficult. There's a general fear in the market.''

Claims Blocked

A group of banks signed a so-called standstill agreement that blocks them from making claims on outstanding loans as they try to hammer out a rescue, according to one of the people.

HeidelbergCement traded down 17 percent at 42.49 euros as of 2:09 p.m. local time. The company has lost 60 percent this year, cutting its market value to 5.31 billion euros ($6.7 billion).

HeidelbergCement owes 15.3 billion euros and is due to repay 6.6 billion euros, or 43 percent of the total, next year, according to data compiled by Bloomberg.

The banks, which also include state-owned Landesbank Baden- Wuerttemberg and Royal Bank of Scotland Group Plc, may agree on a bridge loan by early this week to avoid a potential collapse, the people said.

Merckle, 74, whose estimated $9.2 billion fortune put him 94th on Forbes's list of the world's richest people this year, may be forced to sell his Ulm, Germany-based generic-drug company Ratiopharm GmbH and other assets, said the people.

To contact the reporters on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net