Tue, Nov 24, 2020 page10

• World Business Quick Take

  • Agencies
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  GERMANY

  Spending awaits approval

  Chancellor Angela Merkel’s government is asking lawmakers to approve a spending plan for next year that raises planned new debt by about 70 percent to pay for the fallout from the COVID-19 pandemic. The government is seeking approval to raise net new borrowing to more than 160 billion euros (US$190 billion) from 96.2 billion euros in the latest draft, according to a document obtained by Bloomberg News. Aid to companies struggling to survive amid government-imposed lockdowns would account for most of the increase, at about 40 billion euros, the document shows. The government might have to borrow less than planned this year, as not all funds would be drawn down by companies.

  SOUTH AFRICA

  Fitch casts doubt on plan

  The country might struggle to stick to a plan to rein in government spending by freezing public-sector wages, Fitch Ratings said yesterday. Minister of Finance Tito Mboweni has outlined a plan to pare the government salary bill, which has surged 51 percent since 2008, as part of an effort to start bringing its debt trajectory down after 2026. Still, the government has not had a good track record in maintaining a lid on public spending during the past decade, Fitch senior director for sovereign ratings Jan Friederich said. Fitch on Friday lowered the country’s credit ratings after the COVID-19 pandemic pushed the economy into its longest recession in almost three decades.

  RETAIL

  Guitar Center goes bankrupt

  Guitar Center Inc, the largest US retailer of music instruments and equipment, on Saturday filed for Chapter 11 bankruptcy, as music lovers moved their shopping online during the COVID-19 pandemic. The retailer has negotiated to have a total of US$375 million in debtor-in-possession financing from its existing lenders and intends to raise US$335 million in new senior secured notes, the company said in a statement. The company in a court filing said it has US$1 billion to US$10 billion of assets and liabilities. Guitar Center, which owns nearly 300 stores across the country, said business operations would continue without any interruption.

  MOVIE THEATERS

  Cineworld secures waivers

  The UK’s Cineworld Group has secured waivers for its debt covenants until June 2022 along with US$450 million in new loans in a deal to ride out the COVID-19 pandemic, which also sees it issue equity warrants worth about 11 percent of its share capital. Cineworld, the world’s second-biggest cinema chain, last month closed all of its movie theaters in the UK and the US and left as many as 45,000 workers unemployed for the foreseeable future. The cinema operator, whose best-case scenario assumes that it could reopen its doors by May next year, said its debt measures have given the company more than US$750 million of extra liquidity.

  BEVERAGE

  Red Bull raises payout

  Red Bull GmbH, the energy drink maker that sponsors extreme sports, raised the annual payout to owners Dietrich Mateschitz and the Yoovidhya family to more than half a billion euros after sales and profit swelled. Red Bull’s net income rose 10 percent last year to 818 million euros after revenue grew 8.6 percent and payouts from subsidiaries soared, according to a filing with the Austrian company register. The payout to founder and boss Mateschitz and Thailand’s Yoovidhya family was 554 million euros.
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