UPDATE 2-German TV maker Loewe seeks protection from creditors
* Move gives Loewe up to three months of breathing room
* Loewe to drastically expand restructuring programme
* CEO says Tuesday's move to speed up search for investor
* Shares drop as much as 27 percent
(Adds CEO comments, details on bank liabilities, brand strategy)
MUNICH/FRANKFURT, July 16 (Reuters) - German high-end TV maker Loewe AG has filed for protection from creditors' demands, giving it three months to turn around a business hit by falling prices and fierce competition from Asia.
Loewe has failed to keep up with mass-market rivals such as Samsung and LG Electronics, and to cope with a slide in the average price of TV sets. Its losses almost tripled to 29 million euros ($37.8 million) in 2012, year-on-year.
The company, which is 28 percent-owned by Japan's Sharp , filed for protection from creditors at a German court on Tuesday, under a law that gives firms up to three months of breathing room to try to fix their finances and stave off insolvency.
It said it would use the time to dramatically expand its existing restructuring programme, find an investor and revamp its brand strategy.
The company, started by brothers Siegmund and David Ludwig Loewe in 1923, has in recent years tried to combat the economic downturn by focusing on premium customers, with sleek minimalist design, high performance and "Made in Germany" quality.
That strategy failed as consumers in Europe, where Loewe generates 97 percent of its sales, shied away from paying prices between 1,000 euros and 5,000 euros for flat-screen TV sets, much more than most mass-market models. Loewe's annual sales dropped to 250 million euros in 2012 from 374 million in 2008.
"Now we have three months' time to finish restructuring and make enough progress on the matter of finding an investor to satisfy the court and creditors," Chief Executive Matthias Harsch told Reuters, adding the filing would help speed up the search for an investor.
For the next three months, Loewe's suppliers and creditor banks, which include Deutsche Bank and Commerzbank , will not be able to demand immediate payment of outstanding debt, though suppliers could still ask for up-front payment if they fear Loewe's finances may deteriorate further.
Shares in Loewe dropped as much as 27 percent on the news of the filing and closed about 12 percent lower at 1.741 euros. Its market value has shrunk to 26 million euros from a peak of just over 270 million reached in 2001.
The company, which unveiled the world's first fully electronic TV in 1931, aims to return to growth by expanding its reach further down the value chain by selling TVs from 800 euros in big consumer electronics shops such as Metro's Media Markt and Saturn chains.
CEO Harsch sought to reassure suppliers, saying the company would be able to complete all customer orders on schedule and pay its bills as they become due in the coming months.
Loewe has 12.5 million euros worth of bank liabilities, and according to its most recent financial statements, its cash had shrunk by about 90 percent to 3.8 million euros by the end of March compared with a year earlier.
Shareholder Sharp was not immediately available for comment.
($1 = 0.7664 euros)
(Additional reporting by Mari Saito and Claire Ruckin; Editing by Christoph Steitz and Pravin Char)