ATU Takeover

Car Repair Chain Faces Rent Crisis

atu
Failure to renegotiate ATU's expensive rental contracts would jeopardize 10,000 jobs.
  • Why it matters

    Why it matters

    ATU must quickly renegotiate the inflated rents on its workshops or face the collapse of the Mobivia deal and likely bankruptcy.

  • Facts

    Facts

    • Founded in 1985, ATU is Germany’s largest chain of car repair workshops, with annual revenues around €1 billion and over 10,000 staff.
    • Last month, Mobivia, a French chain, offered to buy ATU for more than €100 million, on condition that ATU reduce its real estate costs.
    • Deutsche Bank, a major creditor of ATU’s main landlord, will play a significant role in negotiations.
  • Audio

    Audio

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ATU, Germany’s largest chain of auto-repair and car-parts stores, is taking radical action in a crucial dispute over the rent it pays on its 600 outlets.

Internal documents seen by Handelsblatt show that the loss-making company has in effect declared a rent strike against what it says are extortionate rental contracts, some at up to three times the market rate. Unless those costs can be reduced, say sources, a rescue takeover by French rival Mobivia will be called off. That could lead to ATU’s bankruptcy and the loss of 10,000 jobs.

Founded in 1985 by Peter Unger, ATU became as popular with family motorists as it was with boy racers. Business boomed and the chain expanded. By 2004, the company had an annual turnover of €1.24 billion ($1.36 billion). In that year, Mr. Unger sold the firm to American private equity company KKR for €1.45 billion.

But since then, things have gone rapidly downhill for the Bavarian-headquartered firm, as cars have grown more reliable and repairs less frequent.

In recent years, cost cutting, job losses and restructuring have failed to stop the rot. Two years ago, senior bondholders were forced to take losses when their debt was turned to equity; KKR have long since ceded ownership to the investment companies Centerbridge and Babson Capital, and the American bank Goldman Sachs. In 2014-2015 turnover crashed by 6.3 percent and liquidity was down by a third. The company, once a profit machine, announced losses of €69.5 million, and is now closer than ever to insolvency.

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