Reuters: Private Equity: UPDATE 1-Thousands lose jobs as German drugstore chain fails

Reuters: Private Equity Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 1-Thousands lose jobs as German drugstore chain fails Jun 1st 2012, 13:20 Fri Jun 1, 2012 9:20am EDT * 13,200 employees lose jobs as 2,800 stores close * Buyer found for unit Ihr Platz * Investors deterred by legal action, losses FRANKFURT, June 1 (Reuters) - Creditors failed to find a buyer for insolvent German drugstore chain Schlecker on Friday, leaving around 13,200 employees in Germany out of work as the chain closes its 2,800 stores in the country. After months of efforts to try and find a solution for the ailing chain and aborted negotiations on a temporary employment company for its largely female workforce, insolvency administrator Arndt Geiwitz said there was no way to keep the business going. He said the company's debts to creditors were between 500 million and 1 billion euros ($618 mln-$1.24 bln). "I regret this decision for the many employees of Schlecker, some of whom have been with the company for years, and who will now lose their jobs," Geiwitz said on Friday. Trade union Ver.di reacted with "anger, sadness and disgust" and called on politicians to step in. Unlisted Schlecker filed for insolvency in January, hit by competition from privately held rivals Rossmann and dm and after failing to secure funding to upgrade its stores. The Schleckers, once one of Germany's wealthiest families, said they had lost their multi-billion fortune, leaving them unable to pump more money into the loss-making firm. The chain was founded by Anton Schlecker, who opened the first Schlecker drugstore in 1975. KNOCK-OUT Geiwitz had struggled to find a buyer for Schlecker, with potential investors put off by the company's continuing losses and claims made by some 4,000 of the 10,000 employees who had already been laid off. He described those two factors as the "knock-out blow" for Schlecker, a well-known chain in Germany. The other parts of Schlecker have found more favour, with the French unit being sold to French retail group Systeme U earlier this week, and investment company Dubag reportedly wanting to buy subsidiary Ihr Platz. Geiwitz said a preliminary deal had been signed to sell Ihr Platz, which has around 4,000 employees and 490 stores, and some larger format Schlecker stores, but did not specify the investor. Dubag was not immediately available for comment on Friday. Geiwitz said he would try to find buyers for individual Schlecker stores, but that the chain would start closing-down sales in June. The lay-offs come as euro zone joblessness in March and April rose to the highest level since the EU began tracking unemployment data for the currency area, highlighting the devastating impact of the bloc's debt crisis. Those interested in potentially buying Schlecker included billionaire investor Nicolas Berggruen, who owns the Karstadt chain of department stores in Germany, and financial investor Cerberus. Geiwitz said Berggruen had pulled out of the process, while the other offer had not been acceptable. German media reports had said previously that a buyer would be unlikely pay more than 100 million euros and that 90-150 million euros alone would be needed to refurbish the stores, which lack the type of allure that helped rivals Rossmann and dm grab market share from Schlecker. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions