KarstadtQuelle's second-lien term loan soared last week to 115 from the 106-109 range a week earlier after the company said its plans to sell its real estate assets are on schedule. The German retailer, which operates Europe's largest department store and mail order group, plans to pay off all its bank debt from the sale of the real estate. The first-lien bank debt traded steady in the 98-99 range. Karstadt has E2.5 billion of bank debt. Of this, E300 million is second-lien debt. Bayerische Landesbank is the lead arranger. The second-lien debt is trading higher than the first lien because it contains a call provision and has a higher coupon, according to a dealer.
The company says in a release that an offering prospectus is being prepared and will shortly be sent to potential buyers. Goldman Sachs is marketing the real estate. "Currently there is strong demand from abroad for real estate in prime locations in the center of German cities," Thomas Middelhoff, Karstadt's chairman, said in the release. "Thus, our department stores are particularly attractive to investors. This is also reflected in the number of potential buyers who have approached us." A Karstadt spokesman said the company hopes to pay off the bank debt by the end of this year.