(Adds terms of Blackstone's debt restructuring plan)
By Sandrine Bradley
LONDON Feb 9 Blackstone tabled a debt
restructuring plan for German outdoor brand Jack Wolfskin before
a lender call on Wednesday, sources close to the situation said,
as the company's earnings remain under pressure.
Under the terms of Blackstone’s proposal €150m of Jack
Wolfskin's circa €300m debt will be reinstated – although it is
unclear on what terms - leaving lenders to take a haircut of
Blackstone is also proposing an equity injection of €50m
into the company - €25m of which is to come from lenders - with
Blackstone keeping a majority ownership.
“This is not a compelling offer,” one source close to the
situation said. “Why would lenders take a massive haircut and
inject €25m and still not have control of the company.”
A coordinating committee of lenders proposed an alternative
lender-led restructuring plan on the call, which could see
lenders take control of the business from Blackstone in a
debt-for-equity swap. Blackstone declined to comment.
The coordinating committee includes HIG Capital, CQS and
Sankaty. Many of the banks that originally lent to Jack Wolfskin
sold their debt to a variety of funds which could make it easier
to get a consensual agreement to a lender-led restructuring,
“Given the lender group composition – just funds – you could
presume that everyone shares a certain objective (to gain
control of the company),” the source said.
The lender-led proposal includes a significant fresh cash
injection into Jack Wolfskin and would also cut lenders' debt to
€100-150m from around €300m in return for ownership of the
company, he added.
A sale process also started this week with final bids due by
the end of February. Sales are often used in debt restructuring
situations as a way to establish a valuation for the company and
a serious bidder is not expected to materialise.
“No-one expects a viable buyer to come forward at this late
stage,” the source said.
In January Jack Wolfskin agreed a circa six-month waiver
with its lenders to give it time to agree a restructuring deal.
PJT Partners is advising the company on the restructuring, while
lenders have hired Houlihan Lokey and law firm Kirkland & Ellis.
Jack Wolfskin has been struggling with tough conditions in
the retail sector and has also faced difficulties in China since
it took direct control of the distribution of its products to
around 700 Jack Wolfskin stores in the country in 2015.
In July 2015 it amended and extended its debt, which
included a €75m capital injection from Blackstone. Blackstone
agreed to buy Jack Wolfskin in 2011 from Quadriga Capital and
Barclays Private Equity, backed with €485m of debt.
(Editing by Alasdair Reilly)