The SMCP share on the rise in the perspective of a change of owner


An employee organizes a clothing exhibition inside a Claudie Pierlot luxury clothing store, operated by the SMCP group, in Paris, France, December 21, 2017. REUTERS / Benoit Tessier

PARIS, Oct.5 (Reuters) – Shares of SMCP (SMCP.PA) rose on Tuesday as the French fashion company moved to change ownership, prompting analysts to raise expectations for its Financially limited majority shareholder, Shandong Ruyi (002193.SZ). its exit.

Chinese textile and clothing maker Shandong Ruyi confirmed on Tuesday that its European unit TopSoho had failed to repay 250 million euros ($ 293.35 million) in bonds exchangeable for SMCP shares.

This means that the owners of the bonds will become – at least temporarily – owners of shares in SMCP, although sources say they will seek to transfer them to a buyer.

“The expected imminent exit of ailing shareholder Shandong Ruyi removes a headwind that has increased SMCP’s risk profile since its IPO, so we are eliminating our shareholder discount,” Jefferies said in a research note. , enhancing the action to “buy”.

On Tuesday, a company called Glas SAS, which said it was acting as a fiduciary for bondholders, said in a statement to the French market regulator that it could now exercise voting rights equal to somewhat less than 29% of SMCP – effectively showing a first change of ownership is in progress.

Glas said the bondholders he represents do not want, as a group, to initiate a buyout offer for the company – something any owner over 30% should do. This leaves them looking for a buyer for participation, through a legal process which will be managed under UK jurisdiction.

“For the most part, SMCP is for sale,” said a source familiar with the matter.

SMCP’s labels, which include Sandro and Maje, are outperforming according to social media data, analysts added.

Shares closed 6.7% higher on Tuesday after rising around 10%, hitting their highest level in about four months.

The change in ownership could be a lengthy process, Jefferies analysts added, noting that U.S. private equity players and affordable luxury groups would likely be interested in acquiring the group. The source familiar with the matter said bondholders were looking for a single buyer.

Ruyi embarked on a shopping spree in 2015, seizing brands such as Aquascutum, Cerruti 1881 and Savile Row tailor Gieves & Hawkes with the ambition to build an empire rivaling that of luxury giant LVMH. , but struggled under the weight of acquisition debt.

The sprawling Chinese conglomerate’s financial woes have worsened with the coronavirus outbreak in China, and it failed to secure funding for a $ 600 million deal to buy Bally last year.

SMCP recently rebounded from the coronavirus crisis, with sales up 54.6% organically, fueled by China’s appetite for its contemporary French fashion, following a 24% drop in sales last year.

Reporting by Mimosa Spencer and Silvia Aloisi, editing by Ed Osmond and Marguerita Choy

Our standards: Thomson Reuters Trust Principles.

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