UPDATE 1-Praktiker says board no longer thinks company can continue business
* Praktiker says talks with creditors were unsuccessful
* Praktiker says company lacks liquidity, is heavily in debt
* Praktiker says board to review entities subject to insolvency petitions (Adds company statement)
FRANKFURT, July 10 (Reuters) - German do-it-yourself retailer Praktiker said on Wednesday its management board was no longer sticking to the assumption that the group could continue its businesses after financing talks with creditors ended without agreement.
"The management board of Praktiker AG has denied the positive continuation forecast for Praktiker AG and certain entities within the Group," the company said in a statement late on Wednesday.
Praktiker said it lacked liquidity and was heavily in debt, which it said were grounds for insolvency under German law.
"The Management Board will carry out a review in relation to the Group in order to determine the entities in relation to whom insolvency petitions will have to be filed and will then publish the results of this review as soon as possible," the company said.
It said negotiations on a further restructuring of its finances were "unsuccessful" on Wednesday evening "because certain creditor groups did not provide approval for such financing."
The company said it needed an "alternative financing solution" after the sale of its stake in Luxembourg-based unit Batiself SA could not be completed by the buyer.
The expected proceeds from the sale were part of the financing concept drawn up last year, it said.
Several people close to the matter told Reuters earlier on Wednesday that Praktiker was in talks to find financing to pay suppliers.
Two people close to Praktiker's supervisory board said the company was still talking to one bank. Talks with current creditors over an injection of 30-35 million euros ($38-45 million) had ended without agreement, three people close to the negotiations said.
Praktiker, which runs 430 shops in nine countries, has been trying to improve its fortunes with store refurbishments after big discounts to entice customers led to losses. A cold, wet European spring compounded its difficulties.
"It's difficult. Very, very difficult," a supervisory board member said following a board meeting on Wednesday.
A spokesman for Praktiker had declined earlier on Wednesday to comment on the company's financial situation. He said the board was meeting on Wednesday but declined to say which topics were being discussed.
Praktiker's management was prompted to seek new funding after a credit insurer withdrew coverage to some of its suppliers this week, according to two people close to the creditors.
Credit insurers protecting suppliers against losses if a company fails to pay its bills. The loss of cover could mean suppliers insisting on quicker or even upfront payment for goods.
One of Praktiker's biggest creditors is Commerzbank , which declined to comment on the matter.
- Still no sign of Malaysian jet lost in 'unprecedented mystery' |
- The search for missing Malaysian jet
- Mexico kills drug kingpin reported dead years ago: official
- Missing Malaysian jet may have disintegrated in mid-air: source |
- Exclusive: Malaysia plane probe narrows on mid-air disintegration - source