November 16, 2017 / 6:00 PM / a year ago

Stockmann puts Helsinki department store up as collateral in refinancing

HELSINKI, Nov 16 (Reuters) - Finnish department store and fashion chain group Stockmann on Thursday put its flagship Helsinki department store property and other real estate assets forward as collateral for a 650 million euro ($765 million) refinancing package.

The company also said it was confident on reaching a deal to sell the Nevsky Centre, a department store property in St Petersburg with a book value of 181 million euros.

Stockmann has struggled in recent years due to slowdowns in Finland and Russia. It has reorganised its operations, pulled out of Russian retail businesses and divested one fashion chain.

On Thursday, the company agreed on the refinancing of its long-term loans to replace 700 million euros of credit facilities that would have expired in 2019.

In contrast to the current loans, the new ones will be secured by Stockmann’s real estate assets, including its landmark Helsinki department store building.

“As we get the financing in place, we will continue to focus on improving the profitability of our business, the ongoing turnaround at retail, as well as our planned measures at (fashion chain) Lindex,” Chief Financial Officer Kai Laitinen told Reuters.

Stockmann cut its full-year outlook in September and followed up by posting an adjusted operating loss for the third quarter due to weak sales at Lindex.

It has been negotiating with investment company O1 Group on its St Petersburg property. Laitinen was optimistic that a deal could be reached.

“We do believe that we will reach a deal... The process and the discussions are ongoing, and we think that there will be a conclusion at some stage.” ($1 = 0.8495 euros) (Reporting by Jussi Rosendahl; Editing by Hugh Lawson)

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