| LONDON, June 4
LONDON, June 4 Struggling French retailer
Vivarte has reached an agreement with 12 lenders on a financial
restructuring to wipe out 2 billion euros ($2.72 billion) of
debt and inject new money that will see lenders take the
business, it was announced on Wednesday.
Alcentra, Hayfin, Oaktree, ICG, Canyon, Goldentree, Babson,
Oak Hill, GLG Partners, CSAM, 3i and Avoca -- which between them
own over 50 percent of the company's debt, have proposed to
inject 500 million euros of new money and reduce debt to 800
million euros from 2.8 billion euros in a debt-for-equity swap.
The 2 billion euros of debt will be converted into equity
and quasi-equity instruments, the announcement said.
The agreement was presented on Wednesday to all of Vivarte's
lenders, which will now vote on the proposal.
All of the lenders need to approve the proposal but if
two-thirds agree to it, Vivarte can request a Sauvegarde
Financiere Acceleree (SFA) process, the French equivalent to a
UK scheme of arrangement, which will bind all lenders to the
deal, a source said.
As part of the proposal, Vivarte will have a new governance
structure chaired by the group's CEO and consisting of nine
Vivarte entered into a four-month conciliation process with
its lenders in March to negotiate a way forward after failing 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 in April and five formal
offers were submitted on May 9.
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.
($1 = 0.7342 Euros)
(Editing by Christopher Mangham)