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Thomas Cook “completely ring-fenced” against bankruptcy

Thursday, June 11th 2009 - 10:05 UTC
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Arcandor employs 70.000 people and was in trouble long before the global crisis started. Arcandor employs 70.000 people and was in trouble long before the global crisis started.

Germany's Arcandor, which owns 52% of Thomas Cook, filed for bankruptcy protection after the German government rejected a request for loan guarantees.

Arcandor, which employs about 70,000 people, had sought 650 million Euros of guarantees because about 600 million Euros of its loans need refinancing.

Arcandor said its bankruptcy filing covered German retailer Karstadt and its mail-order businesses. However, it added that Thomas Cook “will remain unaffected”.

Last week, a Thomas Cook spokeswoman had said the travel company was “completely ring-fenced” from Arcandor and that the two companies were operationally and financially distinct.

Chancellor Angela Merkel had insisted that no state aid would be available unless the company put together a viable plan and its owners and banks put in more money.

“This was an unavoidable step, but one which can be used to create new opportunities,” Mrs Merkel said. The German government has been reluctant to help Arcandor, because the company was in trouble before the economic crisis.

The government has a 100 billion Euro fund to provide temporary loans for firms hit by last year's financial crisis and its aftermath, but this does not apply to companies that first got into difficulties before 1 July 2008.

Arcandor has been in talks with rival Metro on a merger of their department stores, as well as appealing to the government for help.

Reports suggest that Metro was looking into buying 60 of Arcandor's Karstadt stores, and German firm Otto, world's biggest mail order group, might be interested in parts of Primondo.

Shares in Arcandor have dropped 76% this year, and fell 81% last year.

Categories: Economy, International.

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