KarstadtQuelle has announced an end to the risk of insolvency with a €4.5 billion refinancing deal. The struggling German retail chain used its core property portfolio to back the deal, which was structured through a joint venture with Goldman Sachs.

According to the Financial Times the deal has, however, been criticized by analysts who claimed it lacked transparency. Announced amidst the release of unsatisfactory 2005 results, shares slid 3.1 percent on Monday.

Chief executive Tomas Middelhoff has concentrated on cutting costs and disposing of assets since assuming control in May of last year. He managed to raise €1 billion, mainly from the sale of smaller department stores and specialist retail outlets. Furthermore, 25,000 staff cuts were made.

With the €3.7 billion cash injection announced this week, Middelhoff said that the company’s remaining €3 billion debt would be erased. “Paying off the group’s debts opens new opportunities for us to develop and grow on the basis of a less capital-intensive business model,â€? he said.

The joint venture will include 174 properties, with 51 owned by Goldman Sach’s Whitehall Fund and 49 percent owned by Karstadt. Goldman is further thought to be investing €100 million of equity, with the rest of the funding of the acquisition derived from debt.

The company said losses were reduced by 80 percent last year to €317 million, although sales fell 4.2 percent to €15.5 billion. Karstadt said that sales should rise “slightly� this year, but operating profits should see an increase of 20 percent from €544 million last year.