By  on May 11, 2009

BERLIN — Arcandor shares fell almost 19 percent Monday on reports that the embattled department store, catalogue and travel group soon would be seeking state aid.


The group — which includes the Karstadt department store chain, Quelle catalogue and Thomas Cook Travel — needs to refinance loans of 650 million euros, or $882.9 million at current exchange, by June, and up to a total of 900 million euros, or $1.2 billion, over the next five years to finance its restructuring program. Sources say small banks now want to back out of loans totaling 90 million euros, or $122.2 million.

In an interview in the Sunday paper Bild am Sonntag, chief executive officer Karl-Gerhard Eick said, “We’re striving to submit an official request for state guarantees through the banks soon.” The German government earlier said Arcandor could tap into its support funds if the need arises.

Eick also described negotiations with the banks as “arduous, as expected,” but added the payroll for the group’s 53,000 employees is secure for May.

On Monday, Stefan Herzberg, head of Arcandor’s Karstadt department store division, was quoted in the Westdeuschen Allgemenine Zeitung as saying, “government guarantees were conceivable” as part of the group’s attempts to stay afloat. He further noted that the group has only one month’s time to finalize its refinancing plan.

An Arcandor spokesman confirmed the published statements.

“That Arcandor is seeking government guarantees is sure,” said an analyst in Germany. “The question is whether they’ll get them.

“This company is extremely endangered with bankruptcy,” he continued, “and right now it’s the short-term financial problems that urgently have to be settled. Eick said the payroll is secure for May, but it’s already mid-May. What about June? Apparently, things are more critical than ever before.”

With German parliamentary elections coming up in September, an Arcandor bankruptcy wouldn’t be welcomed by the government, the analyst suggested. He added that “50,000 unemployed and a department store closing in every major German city wouldn’t go down too well with voters. So I believe that, in the short term, things will be arranged, but midterm, it’s open.”

Arcandor’s stock closed down 19 percent to 1.95 euros, or $2.63, compared with 2.41 euros, or $3.25, on Friday. The stock’s 52-week low was 1.15 euros, and 52-week high, 12.53 euros.

Late last week, the group unexpectedly delayed publication of its six-month financial report.

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