Billionaire investor Nicolas Berggruen's takeover plan for insolvent German retailer Karstadt includes a 10% share of Karstadt's return on equity in the form of warrants for its Highstreet real estate property owners in exchange for agreeing to lower rents, people familiar with the matter told Dow Jones Newswires.

Berggruen additionally wants to amend Karstadt's master lease agreement, which would give him the freedom to separate some segments, such as sporting goods, into individual units.

The amendment would let Berggruen more effectively pursue sales and merchandising agreements with external business partners who otherwise wouldn't be interested in investing in mixed-use stores, one of the sources said.

Berggruen remains committed to keeping Karstadt intact however, and won't try to sell or spin off any of the stores.

Berggruen's plan has received some support from Karstadt's creditors but the investor remains in tense negotiations with Goldman Sachs Group Inc. (GS), people said. Goldman Sachs leads the Highstreet real estate consortium which is a major investor in Karstadt properties.

Berggruen and Goldman Sachs' head of Germany, Alexander Dibelius, have already agreed to lower Karstadt rents immediately to around EUR210 million a year but haven't reached an agreement on rising rental costs in subsequent years, one of the people said. Berggruen is still waiting on a response from Goldman Sachs regarding its plan, which it presented to creditors in London on Monday.

-By William Launder; Dow Jones Newswires; +49 69 29 725 515; william.launder@dowjones.com
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