Jun 15, 2009
Arcandor considering insolvency loan application
Jun 15, 2009
FRANKFURT, June 15 (Reuters) - Bankrupt German retailer Arcandor (AROG.DE), which holds about 53 percent in travel company Thomas Cook (TCG.L), will decide soon whether it will apply for an insolvency loan, a spokesman said on Monday 15 June.
A source with knowledge of the situation said Arcandor -- which filed for insolvency last week after the German government rejected its requests for state aid -- would need funding soon to keep operations going.
The Arcandor spokesman said the company was in the process of making a decision on a potential insolvency loan, the size and the banks. In theory, Arcandor could ask for state guarantees for such a loan.
A source close to the company said Arcandor's supervisory board would meet on Tuesday 16 June. Arcandor declined to comment.
The company's insolvency administrator, Klaus Hubert Goerg, invited the press for Thursday 18 June to give an update on the insolvency proceedings. Arcandor is also due to report first-half results on the same day.
The German Economy Ministry had said on Saturday 13 June that Arcandor could still be granted aid from the state. A spokesman for the ministry said Arcandor could still apply for a so-called "Massekredit", a special kind of loan that can be granted once insolvency proceedings have begun.
A Massekredit can be given to companies at short notice to help them keep operating during insolvency proceedings. Servicing such loans takes precedence over claims of other creditors, making it a less risky option for the government.
Arcandor shares, which have fallen almost 60 percent in the past five trading days, rose more than 11 percent on Monday 15 June and closed up 1.3 percent at 0.77 euros.
(Reporting by Eva Kuehnen, Nikola Rotscheroth and Matthias Inverarid in Duesseldorf; editing by Simon Jessop)
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