LONDON — Samsonite has been granted a financial lifeline.
This story first appeared in the June 2, 2009 issue of WWD. Subscribe Today.
CVC Capital Partners, which purchased the travel accessories brand for $1.7 billion in 2007, has injected $175 million into the troubled business, and Royal Bank of Scotland has taken a minority stake in a debt-for-equity swap, according to industry sources here.
Samsonite had been hit hard by a decline in travel due to the credit crunch, and, as a result, had risked breaching its banking covenants with RBS this summer.
Negotiations to save the ailing brand had been taking place since January, and reports were circulating that Samsonite was ready to go into administration, the U.K. equivalent of Chapter 11.
Last month, Samsonite sold Lambertson Truex to Tiffany & Co. after putting it up for sale in December, and, earlier this year, Tim Parker was named as executive chairman of the brand.
Parker, well-known for his cost-cutting strategies and his restructuring experience, was formerly chief executive of CVC companies AA and Kwik-Fit.
An industry source familiar with the situation said Samsonite was now on “firm footing” and “nowhere near” Chapter 11. “The problem has been resolved,” the source said. CVC and RBS spokesmen both declined to comment on Monday.
Under the terms of the deal, CVC will retain a controlling 60 percent in Samsonite, while RBS will hold a minority stake. RBS had been holding about $500 million of Samsonite’s debt, according to sources here.
RBS Group, Scotland’s largest banking group, is majority-owned by the British government after a rescue plan was put into place last fall at the start of the global financial meltdown.