His former colleagues feel sorry for him, admits Karl-Gerhard Eick, chief executive of insolvent German retailer Arcandor. In March he quit as the long-serving and much respected chief financial officer of Deutsche Telekom to take the helm of a company then already fast approaching the abyss.
The move has puzzled corporate Germany.
But Mr Eick says he did not have to think long about accepting the offer to switch to Arcandor.
“I turned 55 at the start of the year,” he says. “As you get older, you ask yourself, ‘What do you still want to do? You’ve got five years left in which you can learn and experience something new.’ I knew what I was letting myself in for.”
Mr Eick quickly drew up a restructuring plan and persuaded the company’s banks to roll over €960m ($1.35bn) in loans coming due mid-June – only to see his hopes dashed when the German government refused to underwrite the scheme.
Even after this bruising political fight, Mr Eick still hopes to convince Klaus Hubert Görg, the court-appointed administrator, that he should get one last chance to restructure the company.
He says: “I’m an optimist by nature. I always saw insolvency as a possibility, but also as a chance – otherwise I wouldn’t have taken the job.”
This pragmatism has allowed Mr Eick to switch gears continually in the past months.
Originally expecting “only” tough talks with the banks, he says it became clear late in March that the company – which owns the Karstadt department stores, Primondo mail order, and 53 per cent of Thomas Cook, the UK travel group – needed a deeper restructuring, at a cost of an additional €900m.
Mr Eick says: “We either had to try this step, or we were on a hiding to nothing. And it was clear that the idea would only work if creditors, owners, employees, suppliers and the public purse all helped.”
Arcandor approached the government to discuss state aid, he says. “We talked about different means, and it was clear it wasn’t going to be simple.But he says at first “everything went to plan”.
However, in mid-May things started going wrong. Government ministers argued about whether to bail out Opel, the European subsidiary of General Motors, which was hurtling towards bankruptcy.
Into this mêlée waded Eckhard Cordes, chief executive of Arcandor’s rival Metro. He offered to save the government a second dispute about a national icon by proffering a “private-sector solution” – Metro could scoop the Karstadt chain from an insolvent Arcandor and merge it with its own Kaufhof stores.
“Opel clearly didn’t help us,” Mr Eick says, “And what Cordes wanted to achieve – to get the government to deny us help – he achieved.”
He scoffs at Metro’s suggestion that its idea would have solved its rival’s problem. “What [Mr Cordes] wanted was a solution at department-store level, which would not have helped to solve the financing problems of the holding, Arcandor.”
But talks with the government became harder. Berlin wanted Arcandor’s main shareholders – bank Sal. Oppenheim and the founding Schickedanz family – to put up more equity in order to reduce the size of Berlin’s contribution but they refused.
By mid-morning on June 9, the government had rejected the options of a credit guarantee and of an emergency loan and hours later Mr Eick filed for protection from creditors.
“It was an unbelievably difficult [decision-making] process and it marks the hardest two days of my working life,” he remembers.
But Mr Eick still has a chance to prove his former colleagues wrong when he presents his new restructuring plan to the administrator in the coming months.
He could also become rich in the process as, on top of his salary and bonus of €3m, his terms of employment allow him to claim1.5 per cent of the value he creates by March 2014.
That means if he can rouse the stock from currently €0.70 to its 2007 all-time high of €28, he could pocket €100m.
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