Karstadt Purchase by Berggruen Closer as Mezzanine Holders Approve Bid

Karstadt’s sale to Nicolas Berggruen moved a step closer as holders of so-called mezzanine financing, a combination of debt and equity, approved his bid for the insolvent German department-store chain.

Karstadt’s biggest landlord, the Highstreet partnership, also said earlier that its creditors approved new rental conditions for the retailer. The creditors approved the conditions at a meeting in London today, spokesman Richard Speich said.

“The important message is that the deal has gone through,” Speich said by telephone. “All that’s missing are a few formalities,” he said, referring to signatures that require notarization.

A court deadline for the completion of the Karstadt takeover ends tomorrow. Berggruen signed a contract to acquire Karstadt on June 8 and since then, has been in talks with the landlords of the retailer, which filed for insolvency last year.

Goldman Sachs Group Inc. has a majority stake in Highstreet. Pirelli & C. Real Estate SpA, Generali Real Estate Fund SA, Deutsche Bank AG’s RREEF Real Estate and Italian entrepreneur Maurizio Borletti, who made a belated bid for Karstadt, also hold stakes in the partnership.

“Everybody has said ‘yes,’ but we need to get the signatures,” Berggruen said on ARD public television. “We’re done as soon as everything is there.”

Berggruen has said U.S. fashion company BCBG Max Azria Group will be his partner for sourcing and merchandising in Karstadt’s operations. Owner Max Azria will “probably” take a stake in the department-store chain, according to the investor.

Berggruen Holdings, the U.S. billionaire’s investment vehicle, buys real estate in the U.S., Germany, Japan and other countries and is developing hydro-electric power plants in Turkey. It has acquired more than 50 buildings in the Berlin area, including some heritage-protected edifices like the Cafe Moskau. After purchasing the properties, Berggruen has often renovated them and rented them to other operators.

Karstadt’s first department store opened in 1881, during the reign of Kaiser Wilhelm I. Its West Berlin outlet --Kaufhaus des Westens, or KaDeWe -- was an icon of capitalism during the Cold War.

To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net; Rainer Buergin in Berlin at rbuergin1@bloomberg.net

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