Thanks for that interesting article, Eugene. Perhaps a M/LGB merger would bring the best of two worlds into big scale

From Model Railroader - 09/22/06 on the Web:

Update from the maker of LGB G scale trainsSeptember 20, 2006
Ernst Paul Lehmann Patentwerk OHG (EPL) in Nürnberg, the maker of LGB trains, requested bankruptcy protection on September 18, 2006. The Nürnberg district court then ordered temporary bankruptcy administration, and Dr. Steffen Goede of the law firm Goede, Bergfeld, Waldherr & Hussmann was appointed as the temporary bankruptcy trustee. Dr. Goede started the temporary bankruptcy administration immediately and is conducting the business of EPL together with the current owners, the Richter family.

The common task is now to preserve and secure this enterprise - and the jobs it provides in Nürnberg - for the future. At a factory meeting, the company's co-workers were updated on all relevant information and were told that wages and salaries are secured for the next three months, no matter what the resolution of the bankruptcy claims. The staff expressed its support of the ongoing efforts to continue the company.

Dr. Goede has already arranged for a meeting today [Wednesday] with all banks involved, so that production and distribution of LGB products to retailers can begin again immediately. The temporary bankruptcy trustee and the management are eager to insure the future of this traditional enterprise, Ernst Paul Lehmann Patentwerk OHG, on a permanent basis. E.P. Lehmann Patentwerk official statementSeptember 19, 2006
Ernst Paul Lehmann Patentwerk today announced that it was taking strong, immediate steps to prevent a hostile takeover of the family firm. Those steps include legal moves that should enable Lehmann to continue providing its quality products and services around the world.

"We do not believe that a hostile takeover financed by international bankers is in the best interests of our employees, representatives, retailers and consumers," said Rolf Richter, Managing General Partner of Ernst Paul Lehmann Patentwerk. "Lehmann has been operating profitably, despite the severe problems in the model train industry, and we believe our family atmosphere is a very important reason for our success."

To preserve that family involvement, Lehmann has taken the legal step of asking the German courts for protection from its financing banks.

"We feared that the largest of our financing banks, an international bank forced upon us after the dissolution of our local bank, sold its loans to Lehmann to a third party without our knowledge," said Richter. Richter also emphasized that these moves will enable it to ship product and provide services during the crucial holiday sales season. "We are going to ship a large volume of popular standard items, like track, and exciting new items," said Johannes Richter, Managing General Partner and production manager of Ernst Paul Lehmann Patentwerk. LGB parent company files for protectionSeptember 18, 2006
E.P. Lehmann Patentwerk, manufacturer of LGB trains, today filed for financial protection in a German court. The protection was sought after the company's bankers called Lehmann's loans due in an effort to force a sale of the firm to an investor favored by the bank. As part of the same effort, the banks had prevented Lehmann from shipping finished goods to its customers, including now-independent LGB of America. (Shipments of LGB trains to LGB of America from other suppliers had not been affected.)

"We're happy they (Lehmann management) have taken aggressive action to protect the company from a hostile takeover. We believe they will begin shipping from Germany again this week. We have plenty of product in our U.S. warehouse and are shipping as normal," according to LGB of America's David Buffington.

Buffington added, "The LGB brand has tremendous value around the world, and no one is going to let that get away." - Terry Thompson

Observation / Hal

Seems there is more to this than meets the eye - calling loans on a perhaps overextended but profitable firm smacks of the predatory in that there is a buyer in the wings. The result is typically a bargain for the investor, and a substantial profit for the bank.

Maybe we must forget for a couple of years the appearence of new impressive models.

Thanks for the article Hal. Certainly explains the actions of LGB. I can't blame for trying to avoid the predators. Seems to be a different situation than what Märklin faced earlier this year. I am pleased at the news of M's profit, even if it is not stellar, it is a good sign for now. If they do take a breather in issuing new products it will give some of us a chance to catch up on our wish lists. I know mine keeps growing every year, without me being able to make much of a dent in it.
Ira