The French fashion group said its creditors have agreed unanimously to waive a chunk worth 846 million euros, or $907 million at current exchange rates, reducing its total debt to 572 million euros, or $613 million. In addition, the maturity on the remaining amount has been extended by two years to 2021, it said in a statement on Thursday.
Faced with a prolonged slump in demand on its domestic market, Vivarte is in the process of dramatically slimming its brand portfolio. It has put on sale Kookaï, Chevignon, Naf Naf, Pataugas and André, in addition to its Spanish shoe subsidiary Merkal.
Vivarte, which is one of France’s largest clothing groups by sales, has struggled to pay back its debt to four investment funds that serve as both shareholders and lenders to the company: Oaktree, Alcentra, GLG Partners and Babson.
With an unemployment rate of 10 percent and French presidential elections coming up in late April, large-scale layoffs at the group risk turning into a hot-button political issue.
“While facing the dire situation of fashion market, the shareholders’ decision demonstrates once again their high sense of responsibility and long-lasting commitment for the success of Vivarte,” said Vivarte chief executive officer Patrick Puy, a turnaround expert who took charge last October.
Under the terms of the debt restructuring agreement, Vivarte will use up to 95 million euros, or $102 million, from the upcoming sale of its brands to finance the development needs of its remaining banners. The group will now submit the plan to its employee representatives and expects it to be final by mid-May.