April 29, 2020 / 8:09 PM / a month ago

Germany's Ceconomy gets state financing over coronavirus

FILE PHOTO: The logo of Ceconomy AG, Europe's largest consumer electronics retailer is pictured at the company's general shareholders meeting in Duesseldorf, Germany, February 12, 2020. REUTERS/Wolfgang Rattay

BERLIN (Reuters) - Ceconomy AG (CECG.DE) has secured a government-backed loan of 1.7 billion euros ($1.85 billion) to mitigate the impact of the coronavirus on its business following forced shop closures, the German consumer electronics retailer said on Wednesday.

Ceconomy, which runs Media Markt and Saturn stores across Europe, said one condition of the loan is that the company suspend dividend payments. The term for the loan has been set until December 2021 with a one-year extension option.

The company had preventively suspended April rental payments at all stores that were then closed, and 20,000 employees were put on short-time work in Germany, although it has begun reopening stores in the country since last week.

Ceconomy said earlier this month that lockdown measures had caused sales, adjusted for currency effects and portfolio changes, to fall by 6.6% and triggered an adjusted loss before interest and taxes for its second quarter of 131 million euros.

A raft of companies is applying for funds from a rescue package set up by the German government.

Reporting by Emma Thomasson in Berlin; Editing by Matthew Lewis

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