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The Koch & Gsell company, which films the “Heimat” Zigis in Steinach, was threatened with bankruptcy. Now it seems that a solution has been found.
Roger Koch, CEO of Koch & Gsell.
«In 2016 we set sail with this frigate, euphoric and full of energy. But also a bit naive. “In fact: some storms awaited Roger Koch’s tobacco company offshore. His company Koch & Gsell, which makes Heimat-brand cigarettes in Steinach, is in danger of capsizing. The company has been in debt restructuring for about a year Koch has been trying to save his company from bankruptcy for so long.
Many small businesses have supported Koch & Gsell
That seems to have been successful. More than 80 percent of the creditors have agreed to a debt restructuring agreement. The written judgment of the Rorschach District Court is still pending. But the legal conditions for the contract to apply have been met. Under the contract, creditors should receive three-quarters of your claims. Comparatively a lot, says Koch.
“It’s important to me that people get as much money as possible.”
Especially since many of the creditors are small businesses that have supported you. To pay off 75 percent of the outstanding debt, Koch & Gsell now uses 80 percent of the free cash flow.
Austerity measures took effect
There is one main reason the creditors agreed: Koch & Gsell is in the black. After the debt restructuring moratorium began about a year ago, Koch had to save.
“We also had to fire people who have contributed a lot to building the company.”
Koch once employed 30 people, now there are 12 incisions that hurt. But “we have been able to settle all the bills since the end of 2019. And we have already been able to pay 2 million Swiss francs in outstanding tobacco taxes,” says Koch happily.
Expensive exaggeration
The reasons the company was in trouble date back to the early days. “At first we bought a cigarette machine in Romania. The agreement was that a Romanian team would regularly produce the Zigis here, ”says Roger Koch.
But the quality was not adequate. The cigarettes were rolled too loosely or the filters came off. ”
Koch and his employees had to learn how to produce the cigarettes themselves.
Koch saw an opportunity when the legal active ingredient in CBD hemp became popular. In 2017, Heimat launched the first machine-rolled hemp cigarettes. The small business in Eastern Switzerland thus gained worldwide attention. Sales increased and Koch hoped that Heimat would now be a success. The company expanded. But the success was bought at a high price: to convert resinous hemp to CBD, new processes and new machines were necessary. The experiments required a lot of work and money. And despite the attention across borders as well, planned exports were delayed, while old bills weighed on the balance sheet.
Broken investor dreams
Roger Koch was just waiting to be bailed out from investors. But the money never flowed, despite some contracts that were signed. “We had to get out of the swamp,” says Roger Koch. But that is not a rejection for the future. The debt restructuring agreement created clear relationships. That makes Koch & Gsell more predictable for investors.
The ship is back on course for the time being. But paying off the debt should take at least five years with current sales, Koch says. Still, he’s confident. Exports to Luxembourg and Belgium have started well. In Poland, Denmark and Austria things are looking good for approval. If Heimat can increase its sales this way, it could be faster. This does not require large investments. Because the new machine that was purchased for the CBD hemp experiments is still running well below capacity.
