Germany’s DIY store chain Praktiker has announced it will seek protection from its creditors after banks refused to restructure its debt. Insolvency procedures will put about 18,000 jobs at risk.
Attempts to rescue Praktiker Group were abandoned after banks had frozen credits, and efforts to sell off a subsidiary in Luxemburg failed, the publicly listed DIY store chain announced late on Wednesday.
The board of the group was currently assessing which parts of the company would have to file for insolvency, Praktiker said in a statement.
Praktiker runs about 430 building stores in nine countries. Some 11,000 of its 18,000 employees work in the company's 300 or so stores in Germany. Last year, it took in revenue to the tune of three billion euros ($3.9 billion).
However, Praktiker has been unable to carve out a profit for several years. Losses mounted in the first half of 2013 as the long winter in Germany had a negative effect on sales during the spring.
First-quarter business results undid positive restructuring effects in the group, worsening its liquidity situation, Praktiker said in the statement.
In addition, an effort to sell off Luxembourg-based subsidiary Batiself failed after a potential investor broke off negotiations.
This resulted in banks withdrawing 35 million euros worth of short-term credit guarantees needed to finance operating costs, the company added.
Under a restructuring program launched in 2012, Praktiker sought to shed its image as a low-price DIY store. But tumbling spring sales forced the group to return to a controversial 20-percent-off-for everything strategy, which has eventually worsened the group's liquidity.
uhe/pfd (Reuters, AFP, dpa)