BERLIN – Escada said its 200 million euro, or $279 million, bond exchange program would launch Monday, and that almost all conditions for its financial restructuring plan, which is necessary to ensure its survival, have been met.
The struggling German fashion house is offering bondholders a cash incentive to exchange their bonds for new ones if they accept the offer during the so-called early-bird period, which ends July 14. The overall exchange period runs through July 31, 2009.
The bond restructuring is key to Escada’s rescue plan, which also calls for a capital increase of at least 29 million euro, or about $40.7 million, at current exchange rates.
Escada said it has received commitments from board members and key shareholders, such as the Herz family, which holds a 24.9 percent stake, Spanish investor Bestinver, holding a 10 percent stake, plus a new investor.
To cover its short-term liquidity as well cash requirements during the restructuring period and beyond, Escada said it has received 15.5 million euros, or $21.7 million, from the sale of its fragrance and cosmetics license agreement. Escada expects a further payment of a further 1.5 million euros, or $2.1 million, in the next months.
Moreover, Escada said HypoVereinsbank has agreed to maintain the existing bank guarantee line of 13 million euros, or $18.1 million, providing the bond exchange and capital increase are successfully completed. Escada added that the German tax authorities have agreed not to tax any recapitalization gains arising from the restructuring plan.
Escada shares rose 8.2 percent to 2.65 euros, or $3.7, in early trading Friday.