PARIS — SMCP’s controlling shareholder has defaulted, potentially meaning the French accessible luxury player could fall into the hands of creditors.
The owner of Sandro, Maje, Claudie Pierlot and De Fursac said on Thursday that it had received notification from trustee GLAS that its majority shareholder, European TopSoho — a Luxembourg-based subsidiary of ailing Chinese apparel company Shandong Ruyi Group — had failed to redeem bonds in the company, issued in September 2018, worth 250 million euros.
These were exchangeable into SMCP shares on Sept. 21, and the shares underlying them are estimated to account for around 37 percent of SMCP’s total share capital.
European TopSoho, which owns 53 percent of SMCP’s share capital, now has until Sept. 30 to remedy the default, according to the statement from SMCP.
The French firm sought to reassure, stating: “SMCP recalls that this situation does not question its own financings and operations.”
Nevertheless, at SMCP’s current share price, the 37 percent stake would not be sufficient to reimburse Ruyi’s debt, putting the full 53 percent share — and control of the company — into play, according to market sources.
Observers have expressed concern over the debt-laden Chinese group’s finances. Previously touted as the “LVMH of China” after a round of acquisitions of international brands — the SMCP purchase dates from 2016 — it lost its key state backer last year, as reported.
Shandong Ruyi also failed to seal its planned acquisition of Bally and cut back at Cerruti and other international brands, and has already defaulted on several investments, causing Israeli men’s wear brand Bagir and Japanese apparel firm Renown to file for bankruptcy protection last year.
SMCP named a new chief executive officer, Isabelle Guichot, after its head of eight years Daniel Lalonde resigned this summer. It is part-way through its “One Journey” strategic plan, which involves shifting to meet changing consumption habits and emphasizing organic growth over retail expansion.
Its sales gained 59.1 percent to 229.4 million euros in the three months to June 30, as reported.