FRANKFURT, June 6 (Reuters) - The German government cranked up the pressure on faltering retailer Arcandor to seek a solution for its business that did not require state aid.
'We must first demand more from the owners and creditors of Arcandor, especially as there are parts of the company which are economically healthy, such as the tourism branch,' German Chancellor Angela Merkel told German weekly Bild am Sonntag in an article to be published on Sunday.
Arcandor has asked Berlin for a 437 million euro ($620 million) loan from state development bank KfW, but German cabinet members have recently said Arcandor was unlikely to qualify for help from Germany's economic stimulus fund.
Time is running out for Arcandor. By next Friday it needs to renew credit lines worth 710 million euros which hinge on support from the government and it has warned it may not survive if it fails to do so.
Sueddeutsche Zeitung said that Arcandor stopped paying rent for its stores on Friday, citing statements made by the company's Chief Executive Karl-Gerhard Eick at a meeting with creditors, shareholders and landlords.
Most of the real estate used by Arcandor is owned by the Highstreet consortium, owned by Goldman Sachs, Deutsche Bank and Pirelli Real Estate.
The consortium declined to comment on the report. Arcandor was not immediately available for comment.
Berlin is pushing Arcandor to consider a deal with rival Metro, which has proposed to merge its department store chain with Arcandor's.
As part of such an agreement, German retailer Otto Group would be interested in Arcandor's sport retailing stores, German weekly Euro am Sonntag reported, citing a spokesman for Otto.
'If there were a private solution for Arcandor, Otto Group would certainly be part of the solution,' the newspaper cited the spokesman as saying in a report to be published on Sunday.
The head of Otto, the world's biggest mail order group, had already told a German magazine last month the company might be interested in parts of Primondo, Arcandor's mail-order division.
Economy Minister Karl-Theoder zu Guttenberg told Der Spiegel magazine it was clear Arcandor could not get support from the economic stimulus fund.
'But there is still the possibility of helping the company with a (rescue) subsidy,' he said, adding that such a move would have to be approved by the European Commission.
'We are talking intensively with Brussels about this.'
(Reporting by Maria Sheahan; Editing by Keiron Henderson) ($1=.7058 Euro) Keywords: ARCANDOR/ (maria.sheahan@thomsonreuters.com; +49 69 7565 1286; Reuters Messaging: maria.sheahan.thomsonreuters.com@thomsonreuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
'We must first demand more from the owners and creditors of Arcandor, especially as there are parts of the company which are economically healthy, such as the tourism branch,' German Chancellor Angela Merkel told German weekly Bild am Sonntag in an article to be published on Sunday.
Arcandor has asked Berlin for a 437 million euro ($620 million) loan from state development bank KfW, but German cabinet members have recently said Arcandor was unlikely to qualify for help from Germany's economic stimulus fund.
Time is running out for Arcandor. By next Friday it needs to renew credit lines worth 710 million euros which hinge on support from the government and it has warned it may not survive if it fails to do so.
Sueddeutsche Zeitung said that Arcandor stopped paying rent for its stores on Friday, citing statements made by the company's Chief Executive Karl-Gerhard Eick at a meeting with creditors, shareholders and landlords.
Most of the real estate used by Arcandor is owned by the Highstreet consortium, owned by Goldman Sachs, Deutsche Bank and Pirelli Real Estate.
The consortium declined to comment on the report. Arcandor was not immediately available for comment.
Berlin is pushing Arcandor to consider a deal with rival Metro, which has proposed to merge its department store chain with Arcandor's.
As part of such an agreement, German retailer Otto Group would be interested in Arcandor's sport retailing stores, German weekly Euro am Sonntag reported, citing a spokesman for Otto.
'If there were a private solution for Arcandor, Otto Group would certainly be part of the solution,' the newspaper cited the spokesman as saying in a report to be published on Sunday.
The head of Otto, the world's biggest mail order group, had already told a German magazine last month the company might be interested in parts of Primondo, Arcandor's mail-order division.
Economy Minister Karl-Theoder zu Guttenberg told Der Spiegel magazine it was clear Arcandor could not get support from the economic stimulus fund.
'But there is still the possibility of helping the company with a (rescue) subsidy,' he said, adding that such a move would have to be approved by the European Commission.
'We are talking intensively with Brussels about this.'
(Reporting by Maria Sheahan; Editing by Keiron Henderson) ($1=.7058 Euro) Keywords: ARCANDOR/ (maria.sheahan@thomsonreuters.com; +49 69 7565 1286; Reuters Messaging: maria.sheahan.thomsonreuters.com@thomsonreuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.