Kirch Appears Ready to Sell F1 Stakes

German media group Kirch appeared ready on Thursday to sell off its prized Formula One stake to reduce its massive debt and save the company from collapse.

Kirch's battle for survival has turned into an arcane chess game involving banks, politicians and foreign media groups such as Rupert Murdoch's News Corp.

All are aware that the future shape of the German media market is at stake.

A source close to Kirch told Reuters on Thursday that the group may sell its stake in Formula One and was considering whether to give up other assets to keep its core media business together.

But, in yet another blow to Kirch, another creditor demanding cash emerged just as the group was engaged in frenzied negotiations on all fronts.

A source told Reuters that DZ Bank, Germany's biggest co-operative, was demanding repayment of a 400 million euros ($348.4 million) loan.

Kirch said in response that none of its loans had been called in, and said talks on Thursday with creditor banks had gone well and would continue. It declined to comment on its exposure to DZ Bank.

Kirch faces the prospect of coughing up billions of dollars of cash to creditors and media partners this year. It has a debt pile of about $5-6 billion.

Pressure on Kirch is coming from German children film rights trading company EM.TV, the owner of a 16.7 percent stake in Formula One, which Kirch had said it wanted to buy.

Wanted Sale

On Sunday, the head of EM.TV Werner Klatten told the Frankfurter Allgemeine Sonntagszeitung he wanted a sale as soon as possible.

Klatten told the paper the stake was used as collateral by Kirch's bankers and would be worthless should Kirch become insolvent.

Despite the pressures, Kirch does appear to have options.

A German newspaper reported on Thursday that Bernie Ecclestone, the founder and 25 percent stake-holder of Formula One, is ready to buy back the business from Kirch for 800 million euros -- albeit at half the price Kirch paid for its 58 percent stake last year.

The Sueddeutsche Zeitung said Ecclestone planned to involve car companies DaimlerChrysler AG and Fiat SpA in Formula One racing once he had acquired the stake.

Ecclestone could not be reached for comment.

On Wednesday, banking sources also said Dresdner Bank was planning to team up with Hypovereinsbank (HVB) to purchase jointly Kirch's stake in publisher Axel Springer Verlag.

Earlier this month, leading carmakers aiming to set up their own Formula One racing series said they had no interest in further talks with Kirch.

The carmakers moved to create a rival organisation last year after Kirch acquired their majority stake in the marketing organisation behind the lucrative Formula One racing events, sparking fears races might be shown only on Kirch's pay TV operation.

Kirch secured 75 percent of the shares in Formula One holding company SLEC, who paid FIA $313.6 million for the commercial rights to Formula One for the next 100 years.