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Shoppers pass a Galeria Kaufhof department store, operated by Hudson's Bay Co., in Berlin in 2016.Krisztian Bocsi/Bloomberg

Hudson's Bay Co. isn't swayed by a European rival's latest attempt to persuade it to sell its German department-store chain.

HBC says new documentation from Austria-based Signa Holding GmbH outlining the financing it has at its disposal for a $4.5-billion bid for Galeria Kaufhof does not change its view that the approach is unsolicited and offers no formal commitment.

"Our statement is unchanged from the press release we issued on Nov. 1," HBC spokeswoman Meghan Biango said.

In that statement, it said its board would review the offer but called it "incomplete, non-binding" with "no evidence of financing."

Signa, led by real estate developer René Benko, sent HBC a letter on Monday to show what it says is proof that it has the necessary funds in place to make the acquisition.

"We fail to understand how it is possible for you to have concluded that our offer is 'incomplete' and lacking evidence of financing, without closely reviewing all relevant information or engaging in a constructive discussion with us," Mr. Benko wrote in the letter to HBC chairman Richard Baker.

"Your comments regarding the credibility of the offer are particularly puzzling as our offer is based on an in-depth analysis of public information and our great familiarity with the Kaufhof assets."

In the letter, Signa says it is confident that it can assume a €1.34-billion ($1.98-billion Canadian) real estate loan from German bank LBBW tied to Kaufhof assets. Signa said it has a financing commitment from Austria's Raiffeisen Bank International AG worth €700-million. Together with a previously announced "capital increase" by Signa and its own cash, the various parts account for the full price, it says.

However, the financing appears on the surface to be conditional. For instance, the €650-million capital increase is made up of commitments from unnamed shareholders, which Signa says can be called upon "at any time."

The letter, and attached documentation from third parties, falls short of being a formal commitment, according to a sources familiar with the situation. For instance, Raiffeisen Bank says in an attached document that it will participate in half the €700-million financing, and that a second, unnamed banking group has "internal approvals" to participate with the remaining half.

Shares in Canada's oldest company have strengthened since the start of this month, when HBC confirmed it had received the approach from Signa, which runs the competing Karstadt chain. Some analysts suggested last week that it is a good time to sell Kaufhof, as it would fetch around $600-million more than what it paid in 2015 at a time when the industry's outlook is murky at best. However, financing details had not yet been made public.

The stock is still down more than 25 per cent over the past year as the traditional retail industry struggles to fend off competition from discounters and online stores such as Amazon.com.

Officials from Signa did not respond to a request for comment. The company, which has both real estate and retailing arms, tried but failed to outbid HBC for Kaufhof in 2015. Its founder, Mr. Benko, has a checkered past. He was convicted of bribery charges in 2012 and given a one-year suspended sentence in connection with an attempt to make a payment to former Croatian prime minister Ivo Sanader to persuade him to influence an Italian real estate deal.

Meanwhile, HBC said the Toronto Stock Exchange has conditionally approved a $632-million issue of its shares to a U.S. private-equity firm. The issue was part of a deal to sell HBC's flagship Lord & Taylor building in Manhattan to office-sharing startup WeWork and its financial backer, New York-based Rhône Capital LLC.

Rhône will get preferred shares that are convertible to common shares equalling 21.8 per cent of the stock when the transaction closes. Company documents show that could increase over eight years.

Sears Canada’s former executive chairman says his plan to buy the struggling retailer was stymied by a process biased towards liquidation. Brandon Stranzl says he feels “deeply” for those losing jobs as the company moves towards closure.

The Canadian Press

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