Many corporations currently urgently need liquid funds in order to remain able to act in the Corona crisis. Adidas has been hit particularly hard – and is now receiving billions in loans.
The sporting goods manufacturer Adidas is getting up to three billion euros in fresh money to survive the Corona crisis – including 2.4 billion euros from the state development bank KfW. The federal government promised on Tuesday that KfW would participate in a so-called syndicated loan with a loan commitment of 2.4 billion euros, the company said. In addition, a consortium of seven other banks from Germany and all over the world would have promised to the amount of 600 million euros.
A company spokeswoman said it has not yet been clarified whether the commitments would be used in full. In any case, according to current assumptions, Adidas is assuming that the loans will be sufficient to overcome the crisis and that no further loans will have to be drawn.
Adidas CEO Rorsted faces “serious challenges“
Adidas had already declared two weeks ago that it would only be able to get through the corona crisis if fresh money flowed. The move now makes the company more flexible again. “The current situation poses serious challenges even to healthy companies,” said CEO Kasper Rorsted. “We are doing our best to ensure the long-term well-being of Adidas, our 60,000 employees and our partners and are already implementing numerous measures,” he emphasized. The used loans should be paid back as soon as possible including interest and fees. No taxpayer money will be used.
One of the conditions of the loan is that Adidas may not pay any dividends to its shareholders during the term. Adidas had previously decided to stop buying back its own shares and to forego the short-term and long-term bonuses for the Executive Board, which make up 65 percent of the annual remuneration, for 2020. Other executives also do not receive a “long-term bonus component” in the current financial year. Some of the employees are sent on short-time work.
Works council and union welcome loan commitments for Adidas
Adidas General Works Council Chairman Kurt Wittmann welcomed the loan commitments. “Our main concern is the protection of Adidas employees,” he said. Michael Vassiliadis, chairman of the union IG BCE, emphasized that the commitment would be a big step towards securing employment. The union expressly welcomes this.
The company said the business impact of the pandemic cannot be predicted at this time. “Therefore, Adidas can still not provide an outlook that includes these effects for 2020 as a whole.” The figures for the first quarter should now be published on April 27, 2020.
Adidas has been hit hard by the Corona crisis. A large part of the stores operated by the company itself or by partners are closed. Athletes all over the world, the company’s most important advertising media, are not active, and large sporting events are canceled in a row.
Adidas caused outrage over the planned suspension of rental payments
The sporting goods manufacturer caused outrage with the announcement that it would suspend rent payments for some branches due to the Corona crisis. Adidas then apologized and paid rent.
The world’s second largest sporting goods manufacturer had a record year in 2019 with a profit of almost two billion euros and had big plans for 2020 – also with the help of the Olympic Games and the European Football Championship. However, the corona crisis had ruined business in China early on. China is the most important market for Adidas after the USA.
Tui and Lufthansa are negotiating state aid
Many corporations are currently supplying themselves with liquidity in order to remain liquid in the Corona crisis. For example, the world’s largest travel company Tui is to receive state aid loans of over 1.8 billion euros. Lufthansa is also negotiating state aid.
