* Insolvency administrator seeks money for staff
* Around 8,600 employees in 8 units affected by insolvency
* Rivals consider buying up stores
(Adds appointment of administrator for Praktiker AG holding
FRANKFURT, July 12 German home improvement
retailer Praktiker will carry on trading from all its
stores pending a review to see if it can be restructured, its
insolvency administrator said on Friday.
Praktiker, Germany's third-biggest home improvement store
chain and a household name in the country, filed for insolvency
on Thursday after talks with creditors failed, triggering fears
of heavy job losses.
Lawyer Christopher Seagon, appointed as insolvency
administrator on Thursday, said he would apply for insolvency
money from the federal government to pay the 8,600 staff that
work for the eight units for which an insolvency application has
"Stores will remain open, sales will continue with all
employees as before," he said in a statement. Seagon will look
at options for restructuring the chain over the coming weeks.
The group has been weighed down by growing debts. It most
recently posted a year-on-year increase of more than a quarter
to 535 million euros by the end of March. At the same time, its
liquid funds shrank by almost 29 percent to 51.3 million euros.
Praktiker stores selling paints, tools and gardening
products are a familiar sight in Germany's out-of-town shopping
centres. But years of under-investment had left the stores
looking tired and made them vulnerable to competition from
rivals with more up-to-date shops and service.
With annual sales of about 3 billion euros, it ranks behind
other home improvement chains OBI and Bauhaus and ahead
The stores were famous for "20 percent off everything"
discounts but these were bad for profits. And Praktiker's
failure to invest in freshening up its stores and services has
drawn comparisons with now-insolvent drugstore chain Schlecker.
"Praktiker was caught napping, just like Schlecker was at
the time, and the insolvency is now the inevitable consequence,"
said Susanne Klaussener, chief executive of German real estate
firm GRR Real Estate Management, which specialises in retail
properties. GRR manages two Praktiker stores on behalf of
property investors but does not own any directly.
"We were always very cautious when it came to Praktiker. The
stores are outdated and some of them are just too small," she
Praktiker has a total 414 stores in nine countries. Its 99
international stores and 132 Max Bahr-branded outlets are
excluded from the insolvency.
Separately on Friday, Praktiker said the parent company,
Praktiker AG, had filed for insolvency in Saarbruecken and that
Udo Groener has been named as insolvency administrator.
BUYERS FOR STORES
There is already speculation that Praktiker's outlets may be
sold to rivals seeking market share in Europe's biggest economy,
such as Kingfisher or Hagebau.
German daily Boersen-Zeitung said on Friday that Britain's
Kingfisher, Europe's biggest do-it-yourself retailer, was
interested in parts of Praktiker, without saying where it got
Kingfisher, which is already present in the German home
improvement market via a stake in Hornbach, declined
to comment on Thursday whether it was interested in buying any
of Praktiker's outlets.
It has previously said it was not interested in buying
stores in Germany, but could be interested in stores in
countries like France, Poland, Turkey and Romania.
Handelsblatt Online quoted the chief of smaller rival
Hagebau as saying it could buy some Praktiker stores.
"We are interested in principle," Handelsblatt Online quoted
Heribert Gondert as saying.
Industry leader OBI would also be interested in Praktiker's
stores, though not a takeover of the group as a whole, parent
company Tengelmann's chief Karl-Erivan Haub said on Thursday.
Praktiker's shares closed up 8.5 percent at 0.14 euros on
Friday, after losing 65 percent of their value on Thursday.
The company was once worth almost 2 billion euros ($2.6
billion), but as its performance slipped in the economic
downturn, its market capitalisation has shrunk to only about 15
million euros now. One of Praktiker's biggest creditors is
($1 = 0.7668 euros)
(Reporting by Maria Sheahan and Victoria Bryan; Additional
reporting by Neil Maidment and Alexander Huebner; Editing by
Mark Potter, Jane Merriman and Chris Reese)