German trade unions have devised a plan for the rescue of financially troubled Schaeffler, the daily Berliner Zeitung has reported.

According to the report, the trade unions say Schaeffler should first be transformed into a public company (Aktiengesellschaft /AG) with indirect participation of the staff. A foundation should then be set up, in which the employees, Germany and the German states are equally represented. The foundation would then acquire a blocking minority of more than 25% in the new Schaeffler AG. The company’s banks would convert the loans they have granted to Schaeffler into capital and thus obtain up to 50% in the newly organised group.

The report said that the idea is that the staff would be able to exercise considerable control over the operations of Schaeffler, while the state would make sure that any aid granted to the company would be paid back. The Schaeffler family, currently the sole owners, would only be a minority shareholder under the plan.

Last year Schaeffler borrowed EUR16bn to get control of Continental. Since then the recession has squeezed Schaeffler’s earnings and its ability to service its debt, prompting the firm to appeal for state aid from the German government.

Schaeffler has said it needs about EUR6bn in capital, and to raise the amount it has said it is prepared to sell a stake to outside investors while also asking the government for temporary financial support.