The unit of the majority shareholder of SMCP fails to repay its bonds
Adds background, details
PARIS, September 23 (Reuters) – French SMCP fashion company SMCP.PA, whose brands include Sandro and Maje, said Thursday that a unit of its majority shareholder has not honored a debt, which could open the door to a change of ownership of the retailer.
SMCP stock closed 8.6% higher on speculation it would change hands.
European TopSoho, a unit of China’s Shandong Ruyi, defaulted on a bond exchangeable for SMCP shares due September 21, SMCP said in a statement.
If Ruyi does not repay the obligation by a grace period of September 30, the Chinese clothing conglomerate, which has a 53% stake in the French fashion retailer, could settle the obligation with a guarantee of at minus 28 million shares, said Jefferies analyst Kathryn Parker. .
This would correspond to a stake of around 37%, exceeding the 30% threshold forcing companies to make a takeover bid. A source close to the bondholders said they were looking to get reimbursed and were not interested in taking over the business.
“SMCP would no longer have Shandong Ruyi as the majority shareholder, and that would be positive for the shares as it would remove the uncertainty of having a shareholder in default,” Parker said, noting possible speculation on the privatization of the company. business.
The analyst added that SMCP would make an attractive target for some of the affordable luxury players in the United States.
SMCP’s activity recovered significantly in the first half of the year, with China’s appetite for contemporary French fashion helping the group to post sales growth of 54.6% organically.
Ruyi, who once had ambitions to build an empire that would rival that of luxury giant LVMH, has struggled under the weight of acquisition debt. Funding difficulties have worsened with the coronavirus epidemic in China.
Or Shandong Ruyi 002193.SZnor European TopSoho immediately responded to requests for comment sent by email.
($ 1 = 0.8530 euros)
(Reporting by Sarah Morland and Mimosa Spencer; Editing by Nick Macfie)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.