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Germany to give €460 million state loan lifeline to Galeria Karstadt Kaufhof
Ailing German department store group Galeria Karstadt Kaufhof (GKK) is set to receive a state loan worth up to approximately half a billion euro, according to the Deutsche Presse-Agentur agency. The German federal government will help the department store group with a loan of up to €460 million, as part of a financial stabilisation package that was approved by a special committee on January 27.
The loan is a so-called subordinated one, in which the financial assistance is linked to extremely specific conditions and legal requirements. By authorising the loan, the German government wants to help safeguard the jobs threatened by the severe difficulties that GKK has been facing for several months.
In March 2020, the German government set up an economic stabilisation fund to help large corporation deal with the Covid-19 pandemic, via capital guarantees and direct financial aid. National airline Lufthansa and travel operator Tui have already resorted to the fund’s assistance.
The crisis sparked by the pandemic has hit very hard the already ailing GKK. The group had applied for a credit protection measure during the first lockdown period in Germany, in April 2020, setting a term for insolvency proceedings at the end of September 2020.
The procedure was meant to give the chance of a fresh start to the last German department store group still in business, and it involved closing down over 40 branches, slashing approximately 4,000 jobs and cancelling debt for over €2 billion. Since then however, the pandemic’s resurgence has prevented GKK from stemming its financial losses.
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