Spanish department store El Corte Ingles in difficulty

Spain’s well known department store, El Corte Ingles, is in talks to resolve debt of €5 billion.

El Corte Ingles, one of Spain’s largest employers and most venerable retailers, has been hit by the  economic crisis and been forced to cut prices to fight back against cheaper retailers, particularly in the food sector.

In a statement, the store chain said the new debt could take the form of a syndicated loan and could also involve securitising consumer loans from its finance arm.

The department store has long offered consumer financing through its own green store card.

Morgan Stanley is leading the refinancing talks, a financial source said.

The company has €4 billion in credit lines and €1 billion of bonds sold to the department store’s own employees, a financial source told Reuters.

Spanish retail sales have been falling every month for almost three years and consumers have flocked to low-cost outlets. The last set of results published by the company, for 2011, showed net profit dropping by a third.