German retailer has share backing

Karstadt is a household name in Germany

KarstadtQuelle, the struggling German retailer, has won shareholder backing for a 500m euro fund-raising plan, seen as crucial to the firm's survival.

Investors have approved plans to issue 93 million new shares, which forms part of an emergency financial package.

The retailer needs to issue extra shares to obtain a 1.75bn euro loan from a consortium of banks, to be used to fund a major restructuring process.

The retailer is to sell stores and cut jobs as it seeks to return to profit.

Over the hurdle

A small minority of dissenting shareholders had threatened to oppose the fund-raising scheme, arguing that the shares were being sold too cheaply.

However, the firm said on Thursday that it had reached agreement with investors on the issue.

"We have taken the biggest hurdle," spokesman Joerg Howe told the Associated Press.

"We expect that the capital increase can be carried out in short order."

Karstadt, a household name in Germany, has said it will have to cut 5,500 jobs and sell off a series of assets in an effort to make savings of about 3.3bn euros.

Germany's largest department store operator suffered a sharp fall in sales and profits last year as German consumer spending stalled.

The firm made a loss of 570m euros in the first quarter of 2004, compared to a 505m profit the year before.

The firm recently agreed to sell its share of a joint venture cafe business to US firm Starbucks.