Majority of Lehto Group Subsidiaries File for Bankruptcy as Company Collapses

Majority of Lehto Group Subsidiaries File for Bankruptcy as Company Collapses

The majority of Lehto Group’s subsidiaries, which are responsible for its operational activities, have declared bankruptcy. These subsidiaries contribute the most to Lehto Group’s revenue. This is a significant development as Lehto Group is a construction company, and its subsidiaries manage the construction of both residential and commercial properties.

Lehto Group, currently facing financial struggles, announced in a press release that its subsidiaries, namely Lehto Asunnot, Lehto Tilat and Lehto Korjausrakentanmen, have officially declared bankruptcy on Tuesday. This event marks one of the largest bankruptcies in the recent downturn of the construction industry.

The bankrupt subsidiaries are responsible for most of Lehto’s business operations, particularly in the construction of apartments and offices. As such, their bankruptcy significantly affects the majority of Lehto Group’s turnover. Without sufficient funding, the bankrupt subsidiaries are unable to continue their operations.

In 2022, Lehto Group’s total turnover was roughly EUR 345 million. This is a stark contrast to 2018, when the turnover exceeded 720 million euros. Specifically, Lehto Asunto’s turnover in 2022 was around 212 million euros, and Lehto facilities’ turnover was approximately 130 million euros, according to Asiakastieto.

Despite these financial difficulties, Lehto Group’s other subsidiaries, Lehto Components and Insinöoritoimisto Mäkeläinen, will continue their operations. As for the parent company, Lehto is exploring various options for survival, including continuing its operations, selling or reorganizing its operations.

Lehto has been trying to find alternate structural and ownership solutions for about a year to counter the downturn in the construction industry. In October, Lehto agreed to a letter of intent to sell its subsidiaries to an unnamed European management company. However, this acquisition fell through in December. Lehto warned at the time that it would not be able to meet its payment obligations for the first quarter of the year without additional funding.

Following the publication of Lehto’s press release, Nasdaq Helsinki announced that trading in Lehto’s stock has been suspended on the Helsinki Stock Exchange at Lehto’s request. The share price remained at EUR 0.03 on Monday.