Promarkt

German electrical retailer Promarkt was forced into administration in early 2008, following the withdrawal of a key supplier and subsequent lack of trade support.  Gordon Brothers was asked to explore various funding and restructuring options in conjunction with the Administrator and the Promarkt management team, with a view to saving as many jobs as possible. 

Following a review of Promarkt’s business and funding options, Gordon Brothers implemented a solution which enabled over 80% of stores to continue trading.  Subsequently, the Administrator was able to sell 6 stores to trade buyers and this, combined with the cash generated through the closure of the non-viable stores in the estate, injected much needed liquidity into the business. 

In addition to the creation of cash from the store closures, Gordon Brothers’ investment team developed an innovative funding solution, in the form of asset-based lending support for a period of 18 months.  This two-pronged retail and investment support package was instrumental in gaining the support of creditors to implement this restructuring plan.

This programme has facilitated Promarkt’s recovery, enabling it to continue trading on a smaller footprint, finance the opening of one new store, carry out a full refurbishment programme of its existing store portfolio and, most importantly, retain as many staff as possible. 

The restructuring plan was a ground breaking transaction in Germany, galvanising support from all the key parties at the Administrators’ office, shareholders and management. The plan has brought stability to Promarkt, through an ongoing partnership which leverages Gordon Brothers’ financial and retail skills to deliver a solution which saves jobs and lays a solid foundation for future growth.

Dieter Tyralla, FD of Promarkt, said, “Thanks to Gordon Brothers, we are now able to establish our new sales concept under stable and comfortable conditions.  Although all related parties had been under great time pressure and several short term changes had to be managed, it has always been a great pleasure to work with the flexible and target-oriented Gordon Brothers’ management team.“

“As far as we know, this is the first cross-border financing of this kind in Germany” said Christian Köhler-Ma, partner at Leonhardt Westhelle, who headed the restructuring team.  “We see this as an example for an innovative financing approach to be used in future restructures.”