German retailer Arcandor has filed for insolvency after the German government refused its request for state aid to stay afloat.
In a statement today, Arcandor said the court order covered its Karstadt department stores, Primondo mail-order and Quelle catalogue businesses, but excluded UK travel group Thomas Cook, in which it holds a majority stake, and the specialty mail order companies of the Primondo Group and home shopping channel HSE24.
Arcandor had asked the German government for state aid as it struggled with its debt load. Those requests were denied, with Arcandor admitting today: “As a result the company had no further prospects for sustainable financing.” Around €710 million of loans is due on Friday.
In 2007, Arcandor sold its 49 percent stake in the “Highstreet” real estate joint venture it formed with Goldman Sachs’ Whitehall Street funds to RREEF, Pirelli Real Estate, Generali and the Borletti Group.
The Highstreet portfolio comprises 164 properties located throughout Germany, including 81 department stores, nine sporting goods stores, 28 parking lots, 14 office buildings and 32 other facilities for mixed use, retail points of sales, logistics and land, much of which was leased back to Arcandor companies. In December 2007, the net asset value of the Highstreet JV was €4.7 billion. Underlying debt of €3.5 billion was secured by the properties.
The value of the RREEF deal was reported to be €800 million.
Arcandor said it was business as usual at its stores, with chairman Dr. Karl-Gerhard Eick, adding: “Even as the insolvency proceedings are ongoing, we will continue to fight to save as many jobs and locations as possible.”