460 million euros as a loan: the federal government wants to support Galeria Karstadt Kaufhof

Wednesday January 27, 2021

460 million euros as a loan
The federal government wants to support Galeria Karstadt Kaufhof

The corona crisis is affecting inner cities hard. The federal government also wants to help the ailing department store group Galeria Karstadt Kaufhof out of a jam in order to stimulate revitalization there. A loan of up to 460 million euros could cover the fixed costs until Easter.

The federal government wants to support the ailing department store group Galeria Karstadt Kaufhof. According to information from the German Press Agency, it is a stabilization measure in the form of a loan of up to 460 million euros. That was decided by the Committee of the Economic Stabilization Fund. The offer of help is now before the company for a decision. Representatives of several ministries sit on the committee. The economics and federal finance ministries had previously agreed on the stabilization measure, as it was said. Specifically, it is about a so-called subordinated loan. The aid measure is linked to extensive requirements and legal requirements.

With this support, the Federal Government wants to make a contribution to secure jobs and to bridge the current difficult situation for the company. From their point of view, department stores also have an important anchor function for stabilizing inner cities as a whole. The federal government founded the Economic Stabilization Fund (WSF) in March 2020 to support large companies with guarantees and capital aid during the Corona crisis. For example, a billion dollar rescue package for Lufthansa and help for the travel company Tui have already been agreed.

The Corona crisis had hit the already ailing department store group Galeria Karstadt Kaufhof hard. During the first lockdown in April of last year, the group had to seek rescue in a protective shield procedure. Only at the end of September did he complete the bankruptcy proceedings. It was supposed to enable the last remaining German department store group to make a new start by closing more than 40 branches, cutting around 4,000 jobs and canceling more than two billion euros in debt.

Second lockdown exacerbates the situation

At the time, CEO Miguel Müllenbach wrote in an employee letter that Galeria Karstadt Kaufhof was back on the field and would turn the table of successful retailers upside down in the coming weeks and months. But the second lockdown probably thwarted the plan.

The group itself is keeping a low profile when it comes to the current situation. But the GKK general works council chairman Jürgen Ettl only warned a few days ago in an interview with the "Lebensmittel Zeitung": "Currently, the fixed costs are consuming the reserves. It is easy to calculate how long we would survive a lockdown." The trading giant still has almost 130 department stores. In many inner cities, they are considered indispensable crowd pullers, whose closing would also make many surrounding shops difficult to create.