BERLIN (Dow Jones) – The ailing department store group Galeria Karstadt Kaufhof (GKK) has apparently been negotiating with the federal government about financial aid amounting to several hundred million euros since this week. Der Spiegel reported this with reference to people who are familiar with the negotiations. Accordingly, the company would like a subordinated loan of “well under half a billion” to cover the running costs.
At the request of Dow Jones Newswires, a spokesman for the Federal Ministry of Economics said he could neither confirm nor deny the negotiations. Up until a few days ago, Galeria Karstadt Kaufhof had assumed that it would be able to make ends meet with its own funds by the end of January. In the meantime this hope has faded. “If we suddenly talk about closing the shops for another eight to ten weeks, then no non-food company can survive without state aid,” quoted the Spiegel from the GKK group. “We look into the tube with the general help.”
Galeria is well above the limit of 500 million euros in annual sales for bridging aid III. According to the report, the company is currently losing over € 60 million a week that stores are closed. At the same time, the online business is barely going and still only accounts for a few percent of the total turnover of around two billion euros per year.
The group concluded this at the end of September: 2 billion euros in debt were reduced, and over 400 million euros in fresh capital provided by owner René Benko. However, this money has now been used up. However, if the federal government does not have a positive economic continuation perspective, this could violate EU state aid law.
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(END) Dow Jones Newswires
January 15, 2021 07:40 ET (12:40 GMT)