Germany's government on Monday refused to bail out struggling retail conglomerate Arcandor, denying the company's request for 650 million euros in loan guarantees as well as a separate 437 million euro credit line from state development bank KfW. A government steering committee said the applications did not qualify for assistance from the economic stabilization fund created to support businesses hurt by Germany's severe postwar recession.
Arcandor, which operates the Karstadt department store chain and holds a 52 percent stake in travel company Thomas Cook, needed the financing to cover loans maturing at the end of the week. Finance Minister Peer Steinbrueck noted that a bankruptcy filing could not be ruled out, while also saying shareholders and property owners needed to share responsibility for the company's difficulties.
The group had been struggling even before the global downturn hit Germany in mid-2008, a fact that left many observers unsympathetic to its appeal. Chancellor Angela Merkel had previously signaled that state support required a credible restructuring plan. Separately, prosecutors in Essen said they were considering an inquiry into allegations that former chief executive Thomas Middelhoff was involved in a real estate arrangement that led the company to pay inflated store rents.
Arcandor, founded in 1881, employs nearly 50,000 people in Germany and also owns the mail-order brands Quelle and Primondo. Talks about a possible merger with retail giant Metro were scheduled for Monday and Tuesday.
Historical summary. TurkishPress restated this wire report, first published in June 2009, in its own words.