LONDON May 12 A number of lenders to struggling
French retailer Vivarte have submitted proposals to restructure
the company's 2.8 billion euro ($3.85 billion) debt, banking
sources said on Monday.
The plan would lead to an injection of fresh cash and wipe
out a portion of existing debt in return for equity, the sources
Vivarte entered into a four-month conciliation process with
its lenders in March to negotiate a way forward after the
borrower failed to get an agreement from a majority of its
lenders to suspend loan covenant tests.
A number of lenders submitted letters of intent on how to
restructure Vivarte's debt last month and more formal offers
were submitted last Friday, the banking sources said.
Investment funds Oaktree, Canyon, Goldentree and ICG, which
own around 26 percent of Vivarte's loans between them, have
teamed up to submit a proposal and want other lenders to join
them in underwriting a new deal. Other lenders, including
Alcentra, have also submitted offers, they added.
Other parties to have expressed interest in the company
include KKR, as well as Angelo Gordon, the sources said.
Vivarte is looking to reduce debt to a maximum of 1 billion
euros. Proposals centre around the injection of 500 million
euros of new cash either in the form of super senior loans or
convertible bonds and writing off up to 2.3 billion euros of
existing first lien and second lien debt, in return for equity,
the banking sources said.
Vivarte's management is discussing options with the
'Conciliateur' and will decide which offer it prefers before
presenting it to lenders. Any restructuring proposal will
require two-thirds of lenders to approve and subsequent approval
by the commercial court, the banking sources added.
Private equity firm Charterhouse, bought Vivarte in 2007,
backed by 3.43 billion euros of leveraged loans, but has
struggled to manage its debt in an unfavourable economic and
consumer environment in France. Charterhouse is not expected to
be involved in a new restructured Vivarte.
Vivarte's senior loans were quoted higher on Europe's
secondary loan market last week at 40 percent of face value on
May 9 compared to 35.8 percent of face value on May 1, according
to Thomson Reuters LPC data. The loans were quoted higher due to
the potential restructuring, several loan traders said.
Vivarte and Charterhouse declined to comment. ICG, Oaktree,
Goldentree, Canyon, KKR and Angelo Gordon were not immediately
available to comment.
($1 = 0.7269 Euros)
(Editing by Christopher Mangham)