BERLIN – After more than a week of political slaloming, the German government agreed late Monday to grant the bankrupt catalogue company Quelle a loan guarantee of 50 million euros, or $70 million at current exchange rates.
This is widely considered the “last chance” rather than an all-out rescue for the floundering catalogue company, which is a subsidiary of the insolvent Arcandor Group. Quelle’s management is currently working on a restructuring plan. “I hope that we now have a basis upon which to reorganize the company,” Arcandor’s insolvency administrator Klaus Hubert Görg commented.
As reported, the state governments of Bavaria and Saxony had agreed to contribute 21 million and 4 million euros respectively of the planned 50 million-euro- government guarantee. Quelle has operations in both German states, and employs about 8,000 people.
The remaining 25 million euros, however, was a subject of much contention. Quelle was repeatedly called upon to provide sufficient security for the loans.
This proved particularly difficult after it was discovered that immediately prior to Arcandor’s insolvency filing June 9, Quelle’s bank accounts had been emptied and transferred to the parent company. (Arcandor explained that this was a normal instance of “cash pooling.”)
With a long history of falling sales and a notable decline in business since Arcandor’s insolvency, as well as what many say is an outdated, print catalogue-based business model, security based on Quelle’s ongoing turnover was also not sufficient.
Details have not been made public, and the loan guarantees are subject to EU approval.