The Arcandor Success Story

Arcandor, owner of Thomas Cook, Karstadt department stores, and various mail order retailers, is a never-ending turnaround story.

The latest press release says:

"Für die Umsetzung dieser Maßnahmen rechnet der Konzern zusätzlich zur anstehenden Refinanzierung im Sommer 2009 in den kommenden 5 Jahren mit einem weiteren Finanzierungsbedarf von bis zu 900 Mio. €. Derzeit basiert das Refinanzierungskonzept im wesentlichen auf einer weiteren Bankenfinanzierung. Zusätzlich dazu prüft der Konzern jedoch auch Optionen für eine staatliche Unterstützung."

So in addition to the money Arcandor anyway needs to refinance, the latest round of restructuring leads to additional capital needs of 900 m €. And they expect banks to provide that money, but are hoping for government assistance in case that doesn't work out.

Arcandor's financial statements for the year ending 9/08 show net equity of 1.2 bn €, a net asset value (net equity after deducting intangibles) of -3.5 bn €, and net loss of 750 m €.

And it gets better:

In the 12/08 interim report, they show a quarterly loss of "only" 58 m €, but equity is down to 0.7 bn €, and net asset value is down to -5.8 bn € (2.3 bn € deterioration over just 3 months!).

The reason for the extreme drop? Apparently "fx changes" (they have a lot of UK an Eastern European assets) and "value changes of derivatives".

Based on such figures, why would any sane bank lend them still more money?

As for government assistance for department stores, mail order retail and a UK-based travel company: Are they serious?