The sale of Germany's insolvent department-store chain Karstadt to billionaire investor Nicolas Berggruen was finally approved last Friday, after several months of protracted wrangling over lower rents and debt restructuring.
The sale of Germany's insolvent department-store chain Karstadt to billionaire investor Nicolas Berggruen was finally approved last Friday, after several months of protracted wrangling over lower rents and debt restructuring.
Berggruen’s bid was accepted the previous day by two groups of creditors. Holders of mezzanine financing backed the offer just hours after the deal was approved by creditors of Karstadt’s biggest landlord, the Highstreet consortium. Highstreet comprises Goldman Sachs' Whitehall Funds (51%), Deutsche Bank's RREEF funds (24%), Milan-based Pirelli Real Estate (12%), Generali (11%) and the Borletti Group.
'Mr Berggruen and his team have led the negotiations in a persistent and reliable manner. These virtues should prove valuable to the future of Karstadt,' said insolvency administrator Dr. Klaus Hubert Görg in a statement. He also thanked Karstadt’s workers, customers and suppliers for their support in recent months.
In a press conference in Berlin earlier in the day to announce the deal, German Labour Minister Ursula von der Leyen, described it as a ‘very joyful day for Karstadt': ‘Karstadt is not quite out of the woods yet but with Nicolas Berggruen there’s a real chance of getting the business back on track.’
Shares in Arcandor, the insolvent parent company of Karstadt, closed down 7.6% at 21 cents a share on Friday, after the deal was announced. The insolvency administrators now have until 30 September to make the final preparations to hand Karstadt over to Berggruen Holdings. As part of the deal, Highstreet has made rental concessions of more than EUR 400 mln over the next five years, said Highstreet spokesman Richard Speich.
Berggruen Holdings buys properties in markets such as the US, Germany and Japan. After renovating them, Berggruen typically rents them out to other firms.
Berggruen Holdings wasn’t the only firm to take a interest in the troubled retailer: last month, Italy’s Borletti Group - which already owns a minority stake in Highstreet - made a last-minute offer for Karstadt which was rejected by the insolvency administrators at end-August.
International law firm Freshfields Bruckhaus advised the buyer on the deal.
'The negotiation process was very controversial. The provisions of the lease structure and the variety of stakeholders involved have made the operation quite complex,' said Freshfields' Niko Schultz-Süchting, who advised on the negotiation process.