Apax-Owned Takko Trades Barbs With Government That Denied Loan
(Bloomberg) -- Takko Fashion and the state of North Rhine-Westphalia blamed each other for the company’s possible demise after the retailer was denied a much-needed loan, with the state arguing it can’t burden taxpayers and let Takko’s owner, private-equity firm Apax Partners, off the hook.
The discount fashion company with 14,000 employees in Germany said on Monday that talks had failed after auditor PricewaterhouseCoopers, which was reviewing the application for the guarantee, imposed conditions that Takko couldn’t fulfill.
“I am more than disappointed that the state of North Rhine-Westphalia does not support us in this situation that we have ended up in through no fault of our own,” Interim Chief Executive Officer Karl-Heinz Holland said in a release.
The retailer was seeking to get 60 million euros ($71 million) from a guaranteed bridge loan, along with a 15 million-euro injection from private equity owner Apax. The company has been struggling since last March due to the pandemic, and Apax had considered to give up control in a debt restructuring. Then over the summer, it backtracked due to an an unexpected rebound in sales after the first lockdown was eased, only to watch sales plunge again as Germany tightened restrictions again at the end of the year.
Bearing the Brunt
North Rhine-Westphalia’s economy ministry pushed back against Takko, saying it “cannot be that the taxpayer and the employees have to bear the brunt of stress in tense situations and that the shareholders are largely left out.” Bonuses, consulting fees and loan interest resulting from the acquisition of shares cannot be the subject of government support, it said.
Takko said that banks and the owners stood ready to provide funding, and that interest payments would have been serviced from these funds for the duration of the state guarantee.
Management had also agreed to forgo any bonus payments, and most of the consultancy costs were incurred as a result of the state-ordered branch closings, the company added.
Takko’s 285 million euros of notes due in November 2023 were up one cent on the euro to 84 cents on March 9, the biggest jump in a week according to CBBT data, after more than 1,000 stores reopened in Germany at the start of the week.
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