French fashion company SMCP is now majority-owned by a group of bondholders, including BlackRock and a subsidiary of Carlyle. This comes after a unit of SMCP’s Chinese majority owner, Shandong Ruyi, defaulted on some bonds. The bondholders, represented by GLAS, now hold a 22.3% voting rights stake in SMCP. However, SMCP has assured investors and customers that this change in ownership will not impact its financing and operations.
In addition to acquiring a significant stake in the company, the bondholder group intends to make changes to SMCP’s board. Shandong Ruyi previously held a majority capital stake and voting rights but has now seen its stake decrease to 24%. Despite this, it still retains 37% of the voting rights.
The ownership situation surrounding SMCP has become more complex with European TopSoho, a subsidiary of Shandong Ruyi, initiating legal action against the bondholders. European TopSoho alleges that the bondholders are attempting to gain control of SMCP at a low price. This legal dispute introduces further uncertainty to SMCP’s future.
Shandong Ruyi, once ambitious in its pursuit of creating a luxury empire to rival LVMH, has faced financial difficulties since engaging in a spree of acquisitions in 2015. These challenges were exacerbated by the COVID-19 pandemic, making it impossible for the conglomerate to secure financing for the planned acquisition of Swiss shoe and accessories company Bally.
Despite the hurdles faced by its majority owner, SMCP remains optimistic about its financial performance. The company recently announced its confidence in achieving full-year sales of €1 billion, following a strong recovery in revenues during the third quarter. SMCP was acquired by Shandong Ruyi in 2016 from private equity firm KKR.
The change in ownership and the ongoing legal dispute between bondholders and Shandong Ruyi contribute to the uncertain future of SMCP. However, the company remains committed to its operations and is determined to deliver positive financial results.
(Relevant links:
1. https://www.reuters.com/article/us-smcp-debt-idUSKBN27S1EU
2. https://fashionunited.com/executive/report/smcp-to-be-majority-owned-by-bondholders-including-blackrock/2020111049350)
