UPDATE:Merkel:Arcandor Insolvency Offers Restructuring Chance
15 Juni 2009 - 12:59PM
Dow Jones News
Arcandor AG's (ARO.XE) filing for insolvency presents an
opportunity to restructure for a better future, German Chancellor
Angela Merkel said Monday.
The filing for insolvency doesn't mean the end of the troubled
retail and tourism company, "but offers the chance for a reasonable
restructuring," Merkel said at the Day of Germany's Industry,
organized by the BDI Federation of German industries.
She added that the decisions to let the retailer file for
insolvency and help bail out General Motors Corp.'s (GMGMQ) German
unit Adam Opel GmbH were right and she wouldn't have decided
differently had Germany not been in the middle of election
campaign.
She said that although there might be an overcapacity on the car
market, Opel offers good products and an orderly insolvency
wouldn't have been an option given the company's international
ties.
She said Arcandor hadn't met the conditions required for
government aid to be offered to companies hit by the financial
crisis.
Arcandor last week filed for insolvency after the government
rejected its plea for guarantees and a loan, calling for stronger
participation of the retailer's owners, banks and landlords, in
addition to concessions they made up to now.
However, the government bailed out Opel last month, preventing
the company from filing for insolvency along with its U.S. parent
company, GM, and selected Canadian car parts maker Magna
International Inc. (MGA), together with its Russian partners as the
preferred bidder for Opel.
It agreed on providing EUR1.5 billion in bridge financing from
the federal and state governments, paving the way for a takeover by
Magna and its two Russian partners, OAO Sberbank (SBER.RS) and
troubled Russian automaker OAO GAZ Group (GAZA.RS).
In her speech, Merkel also said Germany will remain an export
nation if it wants to maintain its prosperity.
"Are we dependent on exports? I believe there is no alternative
to this because otherwise we will risk our prosperity," Merkel
said.
The banking sector has improved so far that it is out of
intensive care but now in rehabilitation, Merkel said.
She also said that governments around the globe must now do
everything to prevent the financial and economic crisis from
recurring, and this must be tackled on an international level. She
also expressed concern that an improvement to the banking situation
might make financial institutions less willing to implement
rules.
"I don't won't to conceal my concern that as financial
institutes are regaining strength the desire to implement
fundamental changes is retreating," she said. "We have to do
everything to prevent us heading directly toward such a next
crisis."
The measures agreed by the Group of 20 summit in April must be
implemented, Merkel said.
But she warned that "with a slight recovery in the London area,
complaints and objections are growing" regarding the planned
European financial supervision of cross-border operating banks.
-By Andrea Thomas, Dow Jones Newswires; +49-(0)30-2888-4126;
andrea.thomas@dowjones.com