DUESSELDORF, Germany, June 7 (Reuters) - German retailer Arcandor AG will have to file for insolvency on Monday if the German government turns down its request for state aid, a spokesman for the company said on Sunday.
"If we unexpectedly do not find a solution, which would need to include government support, then we would know on Monday that we would be unable to pay on Friday, and then we would have to file for insolvency on Monday," the spokesman said.
Arcandor has asked Berlin for a 437 million euro ($619 million) loan from state development bank KfW, but German cabinet members have said Arcandor was unlikely to qualify for help from Germany's economic stimulus fund.
A government committee with representatives from the finance, economy and justice ministries as well as the chancellor's office is set to meet on Monday to discuss the request, a source has told Reuters.
Faltering Arcandor has said it needed to renew credit lines worth 710 million euros by next Friday and it has warned it may not survive if it fails to do so.
But Berlin is pushing Arcandor to consider a deal with rival Metro AG, which has proposed to merge its department store chain with Arcandor's.
Arcandor's Chief Executive Karl-Gerhard Eick and Metro CEO Eckhard Cordes are meeting on Sunday to discuss a possible rescue for the German retailer, a spokesman for Metro said.
FOUR-STEP PLAN
Arcandor's supervisory board chairman and Goldman Sachs's German head Alexander Dibelius will also take part in the meeting, he said.
Most of the real estate used by Arcandor is owned by the Highstreet consortium, owned by Goldman Sachs, Deutsche Bank and Pirelli Real Estate. A German paper has said Arcandor has stopped paying rent for its stores.
Metro CEO Cordes told German weekly Bild am Sonntag he has proposed to the German government a four-step plan to help save Arcandor.
He called for a clear commitment by all parties to negotiate a plan and for the establishment of a "data room" for Arcandor's Karstadt department stores where possible bidders can see their books.
This would be followed by an analysis of which stores are economically viable and negotiations with landlords and service providers over their possible contributions to a rescue.
"After a data room has been set up we could -- if everyone is on board -- reach a solution for the rescue of the Karstadt stores and the setup of a Warenhaus AG (department store alliance) within about two months," Cordes told the paper.
To give Arcandor some breathing space but still keep pressure on all parties, Cordes said the government could grant an emergency bridge loan to keep the company afloat until negotiations had been completed.
Metro has so far said it opposes outright state aid for its rival as it would distort competition and has pushed for a quick agreement on a department store alliance instead.
Such a merged company could even be floated on the stock exchange eventually, Cordes said.
"It would definitely be interesting for investors. But that would be decided later on," he said. (Reporting by Nikola Rotscheroth; Writing by Maria Sheahan; Editing by David Holmes)