A spokesman for the Arcandor group would not comment on speculation that it may sell its 28 Karstadt Sports superstores as part of a new refinancing deal under which Sal. Oppenheim agreed to acquire an unspecified shareholding at €2.60 a share through a 10 percent equity increase worth €58.9 million. This private bank is set to take over an additional 19.5 to 20.5 percent interest in the German retail and travel group, becoming its largest single shareholder and leading Madeleine Schickedanz to lose her 53.3 percent majority stake in the company.
According to the latest unconfirmed rumors, Arcandor may alternatively cash out of some of its food retailing assets or transfer the travel activities of its Karstadt department stores off to Thomas Cook, its big partly owned tour operator, which accounts for 60 percent of the group’s revenues and the largest portion of its profits. An official statement simply said that Arcandor’s supervisory board had decided that it would not sell any shares in Thomas Cook and that no decision had been made regarding Karstadt.
The latest refinancing package and the need for some further asset disposals seem to be related to poor results for the Karstadt department store operations so far this year and Arcandor’s failure until now to conclude a satisfactory alliance with other department stores operators such as Debenhams in the U.K. and La Rinascente in Italy, which also owns Au Printemps in France. A big credit insurance company, Euler Hermes, had stopped supporting Arcandor’s relations with major suppliers just before it signed a new pact with a consortium of its major creditor banks including Bayerische Landesbank, Dresdner Bank and Royal Bank of Scotland, restoring their credit lines ahead of the critical Christmas selling period.
Due also to the worsening economic situation, the share price of Arcandor on the Frankfurt stock exchange has been falling sharply in the last few weeks, reaching less than €2 and making the group worth only about €430 million, or only one-quarter of its valuation at the beginning of 2008. Last year Thomas Middelhoff, chief executive of the group, was targeting a market value of €40 a share by the end of 2008. Because of the dilutive effect of the new equity increase, the share price fell further to €1.56 last Friday, compared with €23.24 one year ago.
