PARISVivarte said it has reached an agreement with a group of 12 lenders to reduce its existing debt of 2.8 billion euros, or $3.8 billion at current exchange, to 800 million euros, or $1.1 billion.

The remaining 2 billion euros, or $2.7 billion, of debt are to be converted “into equity and quasi-equity instruments, so that current lenders will become shareholders at the end of the restructuring process,” the company said.

The French retail group, owner of brands including Kookaï, Caroll, Naf Naf and Chevignon, has been negotiating with 172 lenders to rescale a debt dating back to the company’s sale to Charterhouse Capital Partners in 2007 via leveraged buyout.

The agreement with 12 lenders, representing over half of the company’s debt, also includes an injection of new money amounting to 500 million euros, or $680 million, and plans for “a new governance system for Vivarte.”

Vivarte, which has been battling a morose economic climate with an all-out effort to renovate and reinvigorate its key banners, called the agreement “a milestone.” It is expected to become effective by the end of this month.

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