Adidas said it would accept a €3 billion ($3.3 billion) government-backed loan and halt dividends, to help shore up the retailer against the deadly coronavirus pandemic that has ground global economies to a halt.
“Today, the company received the approval of the German government for the participation of KfW, Germany’s state-owned development bank, in a syndicated revolving loan facility amounting to 3.0 billion euros,” Adidas said in a statement.
Almost all of the brand’s stores across Europe, North America, Latin America, Emerging Markets, Russia and large parts of Asia-Pacific have been temporarily closed for the last four weeks. The wholesale and retail physical activities in these markets usually account for 60 per cent of its business, which have come to a complete standstill due to coronavirus lock-down.
The postponement of sporting events such as Uefa European Championships and the Tokyo 2020 Olympic Games has also suffered the business.
Adidas chief executive Kasper Rorsted said: “The current situation poses a serious challenge even for healthy companies. We thank the German government for its fast and comprehensive course of action in response to this unprecedented global crisis. We are doing our utmost to protect the long-term well-being of adidas, our 60,000 employees and our partners, and are implementing numerous measures. These measures include the establishment of strict cost and working capital controls, the reduction of management compensation, the stop of the share buyback program as well as the suspension of dividend payments. But on top of this, access to additional liquidity is key to weather this crisis. We will repay any used portion of the loan, including interest and fees, as quickly as possible.”