Pressing ahead with restructuring of Karstadt and Primondo/Quelle

01.09.2009

[] Loyalty and new customers are convincing factors / Talks and negotiations commenced as announced / Dr. Klaus Hubert Görg appointed as insolvency administrator

The District Court in Essen as the competent insolvency court has appointed Dr. Klaus Hubert Görg as insolvency administrator of Arcandor AG, Karstadt Warenhaus GmbH, Quelle GmbH and 39 other companies in the Arcandor group, transferring the power of administration and control over all assets and the power of representation of these companies to the insolvency administrator.

The court has set the dates for creditors' meetings relating to Arcandor AG, Karstadt Warenhaus GmbH and Quelle GmbH for 9 November 2009, 10 November 2009 and 11 November 2009, respectively. These three "reporting meetings" will be held in the Gruga Hall in Essen. The creditors' meetings for the remaining companies are scheduled to take place in the days following.

"Our aim is to present the creditors in November with feasible restructuring concepts for voting," Görg said. "As announced in Nuremberg on 13 August, we will therefore press ahead with the restructuring of the two trading segments Karstadt and Primondo/Quelle."

Karstadt department stores

At the start of the trading months generating the highest turnover, Görg referred to this year's autumn campaign, "Top quality at top prices", which has been an established feature of Karstadt in Germany since its 125th anniversary. "The success of our restructuring depends as much on our committed staff as on our loyal and new customers who we hope to gain and retain with this year's autumn campaign, convincing them of Karstadt's quality," Görg said.

As announced, the talks with employee representatives, lessors, service providers and suppliers in the Karstadt sports and department stores sector are aimed to be constructive. The outcome of the respective negotiations about contributions to the restructuring efforts will eventually make up the key points of the insolvency plan which is to restructure Karstadt "as a whole". The results of these negotiations are to define how many Karstadt stores on the whole can continue operating. Currently, 19 of a total of 126 stores are still on the check list. The objective of the insolvency administration in the talks about individual restructuring contributions is to ensure that as many stores as possible can carry on. "We know that almost 28,000 employees are waiting expectantly for the key points of the insolvency plan. Therefore, we are negotiating with our opposite numbers as swiftly as possible and, of course, as thoroughly as necessary," Görg explained.

Effective immediately, Karstadt will be managed by the following team: Dr. Thomas Töpfer continues as Chief Financial Officer (CFO); Dr. Emmanuel Siregar stays on as Human Resources Director; Marco Schöner as Chief Purchase Officer of Karstadt remains responsible for purchasing. New to the Karstadt management team are Andreas Boznar, who will in future be responsible for sales, and Thomas Fox from the Berlin-based management consultant firm Modales, who already acted as Chief Restructuring Officer (CRO) in the filing procedure.

Lawyer Rolf Weidmann, Manager of the Essen-based law firm GÖRG, will remain responsible in the insolvency administration team for the Karstadt department stores.

Primondo/Quelle

The negotiations for follow‐up financing of the factoring for Primondo/Quelle are currently in progress.

"All of the parties in the negotiation process are aware of their responsibility of effectively stabilising Europe's largest mail-order company in the market," Görg said. "From our point of view, the talks could be concluded by 9 September 2009."

The negotiations have been in progress since mid‐August 2009 and have included the social compensation plan and a reconciliation of interests for staff who could not be kept on due to the closure of the Quelle Technology Centre after operating losses. "As already announced in mid‐August, the insolvency administration, the management, the employment agency and the Bavarian government have intensively worked on the financing of a job creation and qualification company," Görg explains.

The insolvency administrator is confident that interested investors will have completed their profitability check of a universal and special mail-order cooperative before the start of the creditors' meetings.

As already specified in the filing procedure, GÖRG partner Dr. Jörg Nerlich will be given responsibility for the Primondo/Quelle cooperative.

Arcandor Holding

"We will most likely need the majority of the good 100 staff at the holding to handle the insolvency proceedings and support our restructuring and sales activities," Görg confirmed. Those whose sphere of responsibility was no longer required in the insolvency proceedings would be invited for personal talks
by the end of September, he continued.

In an internal memo to all employees, Görg had written: "On behalf of my partners and colleagues, I would like to thank you very much for your dedication and service in the provisional insolvency proceedings. We know that you have fought passionately for your company since 2004. We also know that we have important months ahead of us in which we will join together to shape our future."

Along with CEO Dr. Karl-Gerhard Eick, other executives to leave the company include CFO Rüdiger A. Günther, Arnold Mattschull (Head of Central Purchasing), Stefan W. Herzberg (Head of Department Stores), Zvezdana Seeger (Head of Restructuring and IT), and Manny Fontenla‐Novoa (Head of Tourism).

Görg also thanked the members of the Executive Board, who had actively supported the provisional insolvency administration.

Marc Sommer, CEO of the mail‐order group Primondo, will continue to support the sales activities and the control of operations in his area of responsibility.

 

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