Berggruen Karstadt Plan Gives Highstreet 10% RoE Share
18 Juni 2010 - 5:50PM
Dow Jones News
Billionaire investor Nicolas Berggruen's takeover plan for
insolvent German retailer Karstadt includes a 10% share of
Karstadt's return on equity in the form of warrants for its
Highstreet real estate property owners in exchange for agreeing to
lower rents, people familiar with the matter told Dow Jones
Newswires.
Berggruen additionally wants to amend Karstadt's master lease
agreement, which would give him the freedom to separate some
segments, such as sporting goods, into individual units.
The amendment would let Berggruen more effectively pursue sales
and merchandising agreements with external business partners who
otherwise wouldn't be interested in investing in mixed-use stores,
one of the sources said.
Berggruen remains committed to keeping Karstadt intact however,
and won't try to sell or spin off any of the stores.
Berggruen's plan has received some support from Karstadt's
creditors but the investor remains in tense negotiations with
Goldman Sachs Group Inc. (GS), people said. Goldman Sachs leads the
Highstreet real estate consortium which is a major investor in
Karstadt properties.
Berggruen and Goldman Sachs' head of Germany, Alexander
Dibelius, have already agreed to lower Karstadt rents immediately
to around EUR210 million a year but haven't reached an agreement on
rising rental costs in subsequent years, one of the people said.
Berggruen is still waiting on a response from Goldman Sachs
regarding its plan, which it presented to creditors in London on
Monday.
-By William Launder; Dow Jones Newswires; +49 69 29 725 515;
william.launder@dowjones.com
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