2008: Collapse of Lehman Brothers 2 minutes spent reading
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2008: Collapse of Lehman Brothers

Volkmar Held

In 2008, the collapse of a number of investment banks, such as Lehman Brothers in the USA, led to escalating losses on the stock exchanges worldwide.

In the summer of 2008, a dramatic downward spiral of stock prices began. The crisis spread from the financial and capital markets to the real economy. The collapse of the Lehman Brothers investment bank on September 15, 2008 became the symbol of this development. In 2009, the Bank of America swooped in to buy the Merrill Lynch investment bank, one of the underwriting banks of the VOEST-ALPINE AG IPO in 1995.

The voestalpine share at a new low

wall streetThe voestalpine share’s downward trend reflects the worst downturn of the global economy since 1945. In the business year 2008/09, the share lost 78% of its value; on March 19, 2009, it reached its lowest level since the company’s full privatization in 2005 at EUR 8.64. In market quotations, the company’s going-concern value was estimated at only EUR 1.7 billion. This figure, however, referred to “fictitious capital,” as Karl Marx called shares and other tradable financial instruments. The value of the facilities in Linz alone was higher many times over, to say nothing of the capital represented by the experience and commitment of the employees.

voestalpine actively combats the crisis

Economically, voestalpine AG continued to be in good shape. During this period of time, it could point to the railway systems and energy sectors, which were quite stable. It also successfully landed a major order from the US voestalpine company RFC (Roll Forming Corporation). One analyst even rated the voestalpine share as “the most attractive steel stock in the world”!
Nevertheless, seeing as how capacity utilization of the facilities was only at 70%, management had to implement measures such as reduced working hours and job cuts. In order to secure the company’s liquidity for the long term, voestalpine pulled off a financial coup in the spring of 2009 that received international attention: even without a credit rating from a rating agency, voestalpine AG was able to raise funds on the capital market and issue a EUR 400 million bond.

 

Two decades ago voestalpine AG started out on its path to becoming a privatized and exchange-listed company. The ‘IPO 199520 years on the stock exchange’ series describes key events on the path to becoming an internationally successful steel-based technology and capital goods group.
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