By  on July 31, 2014

PARIS — Vivarte said Thursday it had reached an eleventh-hour agreement with its creditors to reduce its debt by 2 billion euros, or $2.7 billion at current exchange, under a restructuring deal that will see ownership switch to a group of 12 lenders.
 
A total of 116 creditors have unanimously agreed to a plan to cut the French retail conglomerate’s debt to 800 million euros, or $1 billion, by converting a portion to equity and quasi-equity instruments. The agreement was presented to a Paris commercial court on Thursday, with a verdict expected on Friday.
 
Under the terms of the deal, four of the lenders — Oaktree, Alcentra, Goldentree and Babson — will become the principal shareholders of the group. A further eight will hold smaller stakes. They are jointly taking control from London-based Charterhouse Capital Partners, which acquired Vivarte in 2007.
 
Marc Lelandais, chief executive officer of Vivarte, thanked the former shareholders for their “responsible pragmatism,” the group said in a statement.
 
“Vivarte now benefits from a healthier financial structure which will allow the group to implement its development strategy, strengthen its mass-market French fashion leader position and give it means to actually become a multichannel and international group,” Lelandais said.
 
“In a difficult market environment, Vivarte, supported by a new group of shareholders who believe in the success of initiated projects, will be able to continue its efforts to modernize and adapt to new market conditions,” he added.
 
Vivarte suspended loan payments in February after failing to convince lenders to waive loan covenants capping its ratio of debt to earnings.
 
Owner of brands including Kookaï, Caroll, Naf Naf and Chevignon, the group is battling a morose economic climate with an all-out effort to renovate and reinvigorate its key banners.
 
Thursday’s agreement includes an injection of new money amounting to 500 million euros, or $682 million, and plans for a stronger governance system with a board including representatives of shareholders, management as well as industry experts.

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