SHANGHAI — A group of lenders to the debt-laden Shandong-based textile giant Ruyi Group has taken over American textile fiber manufacturer Lycra, after Ruyi defaulted on a $400 million loan.
New owners of the textile fiber manufacturer include Lindeman Asia, Lindeman Partners Asset Management, Tor Investment Management and China Everbright Ltd. Ruyi did not respond immediately to WWD’s request for comments.
“We have implemented swiftly the proactive steps required to protect and strengthen the future of the Lycra company and to insulate the company fully from its former shareholder’s financial distress,” the new owners said in a statement.
Lycra said in a separate press release that the “new shareholders are committed to further helping The Lycra Company strengthen its financial position and enable its long-term growth.”
Ruyi purchased Lycra for $2.6 billion from Koch Industries in January 2019 on a loan of about $1 billion. But Ruyi has been unable to repay the Lycra loan since May 2019. In February this year, Ruyi defaulted on a loan used to buy Lycra. Creditors for the debt-laden company started seeking control of the stretchy fabric-maker.
Ruyi’s creditors hired a restructuring specialist to find potential buyers for Lyrca, as the weakening financial performance of the performancewear producer feared a loan default, according to reports at the time.
In June 2020, Ruyi Group lost its key backer, the state-owned Jining City Urban Construction [Investment] Co. Ltd., which then promised Ruyi Group a 3.5 billion renminbi, or $495 million, investment. This led to worsening financial difficulties for the Shandong group. Faced with mounting debt, Ruyi has seen its credit rating downgraded several times by Moody’s.
Once promised to become the ‘LVMH of China,’ the fashion manufacturer embarked on a shopping spree in 2015, including SMCP, Aquascutum and Savile Row tailor Gieves & Hawkes. In 2018, it offered to acquire Bally for $600 million, but Ruyi never completed the transaction.
In January, Trinity Limited, Ruyi’s menswear unit that includes Gieves & Hawkes, Kent & Curwen and Cerutti, was put into liquidation. There were talks for potential buyers to take over these brands, but nothing has yet came to fruition.
The same month, representatives of Ruyi were removed from the SMCP board, after Ruyi’s Luxembourg-based European TopSoho defaulted on 250 million euros worth of bonds, igniting the ire of shareholders like Blackrock and Carlyle, which have united under the name of Glas. Glas owns a 29 percent stake in SMCP and 25 percent of its voting rights following the default.