By  on June 29, 2009

BERLIN — Escada said its 200 million euro, or $280 million, bond exchange program would begin today, and that almost all the preconditions for the realization of its financial restructuring plan have been met.

The struggling German fashion house is offering bond holders a cash incentive if they accept the offer during the early-bird period, which ends July 14. The overall exchange period runs through Wednesday.

The bond restructuring is a central pillar of Escada’s rescue plan, which also calls for a capital increase of at least 29 million euros, or about $40.7 million at current exchange. Escada said it has received “conditional financing and subscription commitments” from members of the board of management; its key shareholders, the Herz family members, who hold a 24.9 percent stake; Spanish investor Bestinver, which holds about 10 percent, and a new investor, who the company did not name.

To cover its short-term liquidity as well as cash requirements during the restructuring period and beyond, Escada said it has sold the receivables from its fragrance and cosmetics license agreement with Procter & Gamble, along with rights, to Zadafo Verwaltungs GmbH. Michael and Wolfgang Herz hold an indirect stake in the company. Escada already has received 15.5 million euros, or $21.7 million, for the deal, and expects payment of another 1.5 million euros, or $2.1 million, in the next months.

Moreover, Escada said HypoVereinsbank, Munich, has agreed to maintain the existing bank guarantee line of 13 million euros, or $18.2 million, providing the exchange offer and capital increase are successfully completed. Escada added the German tax authorities have agreed not to tax any recapitalization gains arising from the restructuring plan.

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