DUESSELDORF, Germany, June 8 (Reuters) - Property group Highstreet warned Karstadt buyer Nicolas Berggruen the insolvent German retailer could still be liquidated if he did not accept its deal on rents.
Berggruen signed a sales contract on Tuesday that has several conditions, including approval of the deal by the cartel office and an agreement on rents with Highstreet, which owns about two-thirds of the Karstadt store space and was a rival bidder.
No financial details have been released but Commerzbank analyst Juergen Elfers said Berggruen's bid for Karstadt had a 70 million euro ($93.92 million) price tag and 240 million euros in investments planned for three years.
Berggruen's spokesman declined to comment on the details.
Berggruen, the billionaire son of a German art collector, has said he wants to save the Karstadt brand and the 25,000 jobs at stake but is asking for further concessions from property owners like Highstreet, owned by Goldman Sachs, Deutsche Bank and Pirelli Real Estate.
The spokesman said there were no store closures planned.
Rent negotiations are planned for this week and Highstreet said it had an offer to cut rents.
'Highstreet is ready to reduce rents by another 230 million euros ($309 million) in the next five years in addition to the contribution of 160 million euros over three years pledged in the restructuring plan,' a spokesman for the Highstreet consortium said on Tuesday.
Should this offer -- available to all potential Karstadt buyers -- not be taken up, 'the probability of a Karstadt liquidation rises significantly', he said. 'An agreement with Highstreet is a core component of rescuing Karstadt.'
In an email to Berggruen from Alexander Dibelius, who heads Goldman's German operations, dated Monday and seen by Reuters, Dibelius suggested lowering the minimum fixed rent to 210 million euros from 250 million for the rest of this year after the closing of the deal.
The rent would go up to 211 million for 2011 and 2012 and would then return to 250 million euros by 2018, the email said.
Dibelius also demands no store closures in the email.
REVISITING KAUFHOF
A collapse of the deal would play into the hands of German retailer Metro.
Metro has said it would be interested in taking some of the 120 Karstadt stores to beef up its own department store chain, Kaufhof, which it wants to sell to focus on its cash and carry and consumer electronics businesses.
It would be difficult for Metro to sell Kaufhof, for which it has set a price tag of 2 billion to 3 billion euros, without the prospect of the buyer also being able to acquire at least some of the Karstadt stores.
'Potential Kaufhof investors (Blackstone, Permira or Borletti Group) would certainly revisit their scenarios and might trim their offers (with the entire Karstadt chain being sold off),' said Commerzbank's Elfers. 'This would trigger delays in the disposal process.'
'We are thus more cautious about the chances for (Metro) CEO (Eckhard) Cordes to strike a good deal,' he added.
Metro shares were down 1.3 percent at 41.685 euros by 1441 GMT, while Germany's DAX index was down 1.7 percent.
($1=.7453 Euro)
(Reporting by Matthias Inverardi; writing by Michael Shields and Eva Kuehnen and Karen Foster) Keywords: KARSTADT/ (Matthias.Inverardi@thomsonreuters.com; +49 211 388 2242; Reuters Messaging: Matthias.Inverardi.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. 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.
Berggruen signed a sales contract on Tuesday that has several conditions, including approval of the deal by the cartel office and an agreement on rents with Highstreet, which owns about two-thirds of the Karstadt store space and was a rival bidder.
No financial details have been released but Commerzbank analyst Juergen Elfers said Berggruen's bid for Karstadt had a 70 million euro ($93.92 million) price tag and 240 million euros in investments planned for three years.
Berggruen's spokesman declined to comment on the details.
Berggruen, the billionaire son of a German art collector, has said he wants to save the Karstadt brand and the 25,000 jobs at stake but is asking for further concessions from property owners like Highstreet, owned by Goldman Sachs, Deutsche Bank and Pirelli Real Estate.
The spokesman said there were no store closures planned.
Rent negotiations are planned for this week and Highstreet said it had an offer to cut rents.
'Highstreet is ready to reduce rents by another 230 million euros ($309 million) in the next five years in addition to the contribution of 160 million euros over three years pledged in the restructuring plan,' a spokesman for the Highstreet consortium said on Tuesday.
Should this offer -- available to all potential Karstadt buyers -- not be taken up, 'the probability of a Karstadt liquidation rises significantly', he said. 'An agreement with Highstreet is a core component of rescuing Karstadt.'
In an email to Berggruen from Alexander Dibelius, who heads Goldman's German operations, dated Monday and seen by Reuters, Dibelius suggested lowering the minimum fixed rent to 210 million euros from 250 million for the rest of this year after the closing of the deal.
The rent would go up to 211 million for 2011 and 2012 and would then return to 250 million euros by 2018, the email said.
Dibelius also demands no store closures in the email.
REVISITING KAUFHOF
A collapse of the deal would play into the hands of German retailer Metro.
Metro has said it would be interested in taking some of the 120 Karstadt stores to beef up its own department store chain, Kaufhof, which it wants to sell to focus on its cash and carry and consumer electronics businesses.
It would be difficult for Metro to sell Kaufhof, for which it has set a price tag of 2 billion to 3 billion euros, without the prospect of the buyer also being able to acquire at least some of the Karstadt stores.
'Potential Kaufhof investors (Blackstone, Permira or Borletti Group) would certainly revisit their scenarios and might trim their offers (with the entire Karstadt chain being sold off),' said Commerzbank's Elfers. 'This would trigger delays in the disposal process.'
'We are thus more cautious about the chances for (Metro) CEO (Eckhard) Cordes to strike a good deal,' he added.
Metro shares were down 1.3 percent at 41.685 euros by 1441 GMT, while Germany's DAX index was down 1.7 percent.
($1=.7453 Euro)
(Reporting by Matthias Inverardi; writing by Michael Shields and Eva Kuehnen and Karen Foster) Keywords: KARSTADT/ (Matthias.Inverardi@thomsonreuters.com; +49 211 388 2242; Reuters Messaging: Matthias.Inverardi.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. 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.
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