Reuters: Hot Stocks: Praktiker shares hit by Max Bahr insolvency move

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Praktiker shares hit by Max Bahr insolvency move Jul 26th 2013, 08:11 Fri Jul 26, 2013 4:11am EDT * Praktiker planned to operate stores under Max Bahr brand * Move comes after credit insurer pulls coverage for unit * Praktiker had net debt of 535 mln eur at end-March * Shares fall sharply, lag German small cap SDAX FRANKFURT, July 26 (Reuters) - Shares in struggling German home improvement retail chain Praktiker came under pressure on Friday after it said it would be filing for insolvency for its Max Bahr unit, upon which it had been placing its hopes for a recovery. Praktiker, whose blue and yellow-branded stores selling paints, tools and gardening products are a familiar sight in Germany's out-of-town shopping centres, had earlier this month filed for insolvency for the Praktiker Holding company and operating units but Max Bahr and its international business had been spared. Late on Thursday, however, Praktiker said a trade credit insurer had withdrawn coverage to Max Bahr's suppliers - meaning that a supply of goods to its stores could not be guaranteed - and so the chain would also shortly file for insolvency. Praktiker's shares, which once traded at over 32 euros ($42.35) back in 2007, dropped 15 percent in early trades and were down 7 percent at 0.12 euros at 0723 GMT. Praktiker, grappling with a decline in sales and profitability since it ended a "20 percent off everything" discount strategy, had been in the process of converting many of its Praktiker-branded stores to the more successful Max Bahr brand, which traditionally had better profit margins. In the first quarter of 2013, however, DIY retailers were hit by the bad weather and Max Bahr, which offers a higher proportion of gardening products, saw like-for-like sales fall 11.4 percent. Holders of 250 million euros of bonds had last week put forward a restructuring plan that would have seen them convert the debt into Praktiker shares and continue operating Praktiker with around 200 stores, but under the Max Bahr brand. Praktiker reported net debt of 535 million euros at the end of March. Trades union verdi said on Friday it was a "scandal" that the credit insurer had withdrawn coverage. "Those that have done good business with Praktiker and Max Bahr for years must now play an active role in helping to give the companies and their employees a future," Verdi executive board member Stefanie Nutzenberger said. ($1=0.7555 euros) (Reporting by Victoria Bryan; Editing by Greg Mahlich) Link this Share this Digg this Email Reprints

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