Mondragón Chairman Resigns Amid Eroski And Fagor Debts

The Chairman of the Basque cooperative group Mondragón, Txema Gisasola (pictured), has resigned citi…

The Chairman of the Basque cooperative group Mondragón, Txema Gisasola (pictured), has resigned citing "personal reasons" in the wake of the massive debt problems incurred by the group's supermarket chain Eroski.

Loss-making electrical appliance manufacturer Fagor, which also falls under the Mondragón banner, filed for receivership in November after it failed to raised the funds needed to service accumulated debts of over €850 million.

In a statement, Mondragón said its board was setting up a management commitment to draw a new “general framework” for the path the cooperative will be taking over the coming years.

A new chairman will be chosen once that task has been completed.

Spanish newspaper El Pais reported last Thursday that Eroski proposed that 30,000 holders of its €660 million debt accept a haircut of 30% of the nominal value of their holdings and to swap these for a new issue of 12-year bonds and the offer of the repayment of 15% of their investment.

Spanish financial news website expansion.com reported that in his farewell, Gisasola claimed that the principles of "solidarity, effort, competitiveness, technological innovation and commitment to society" were still the principle pillars of cooperative members in Mondragón.

With 13 plants in 13 countries, Fagor is Europe's fifth-largest electrical appliances manufacturer, with a market share in Spain of 16.3%.