Jun 29, 2009, 21:00 GMT
Berlin - The German federal government agreed late Monday to a life-sustaining loan to one of Europe's biggest mail-order companies, Quelle, after its parent had declared insolvency.
The government is to instruct its KfW bank to extend a loan of 25 million euros (35 million dollars), matching a further 25 million euros from two German states, to finance Quelle's day-to-day operations during insolvency until December 31.
The two states, Bavaria and Saxony, will remit the funds to Quelle, a subsidiary of Arcandor group, on Tuesday, an official said. Berlin officials said they expected the European Commission to give its blessing in the course of Tuesday.
Though Quelle's troubles pre-date the recession, its insolvency is widely perceived as emblematic of the downturn.
An insolvency administrator, Klaus Hubert Goerg, is expected to seek a new owner or investor for Quelle, which has its main office in the city of Fuerth. Goerg said he hoped it would be possible to restructure Quelle but cautioned this would not be easy.
Quelle, the keystone of Arcandor's web of mail-order and online vendors in 28 nations, declared insolvency on June 9.
Until the 1989 fall of Communism, Quelle's 1,000-page mail-order catalogues were the bible of clothes and home appliances for East Europeans behind the Iron Curtain. Most German households own a few low-priced Quelle products, but the company's appeal has faded.
Today, Quelle takes web orders, but younger Germans perceive Quelle's 70,000 wares as faintly out of date. Its has just published its winter catalogue using borrowed funds.
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