Fri 05/15/2020 04:31 AM
Relevant Document:
Full Covenant Report SSN 2023

German fashion retailer Takko announced it will suspend interest payments on its bonds and appointed One Square Advisors and Gleiss Lutz to advise in debt negotiations, according to sources. A 30-day grace period applies, which will allow the company and its creditors time to negotiate. The company’s bonds fell about 30 points and were quoted at 20 this morning.

Some of Takko €285 million senior secured and €225 million floating rate senior secured noteholders have formed a group and hired Houlihan Lokey and Freshfields Bruckhaus Deringer as financial and legal advisers, respectively, sources told Reorg.

After the expiration of the grace period, the notes can be accelerated by 30% of noteholders.

The ad hoc group represents over 25% of the aggregate bonds and Houlihan Lokey and Freshfields are in discussion with additional bondholders to potentially join the group, sources added.

The company said significant declines in revenue due to store closures in connection with the Covid-19 pandemic has prompted a need to improve its capital and liquidity situation.

A call will be held at 2.30 p.m. BST for bondholders to discuss next steps, sources said.

Takko’s capital structure is below:
 
Takko Fashion S.a.r.l.
 
10/31/2019
 
EBITDA Multiple
(EUR in Millions)
Amount
Maturity
Rate
Book
 
€71.4M Revolving Credit Facility
-
May-2023
 
 
Total Super Senior Secured Debt
-
 
 
€285M Senior Secured Fixed Rate Notes
285.0
Nov-2023
5.375%
 
€225M Senior Secured FRN
225.0
Nov-2023
E + 5.375%
 
Total Senior Secured Debt
510.0
 
3.3x
Other Debt 1
41.8
 
 
 
Total Other Debt
41.8
 
3.6x
Total Debt
551.8
 
3.6x
Less: Cash and Equivalents
(76.9)
 
Net Debt
474.9
 
3.1x
Operating Metrics
LTM Reported EBITDA
155.2
 
 
Liquidity
RCF Commitments
71.4
 
Less: Letters of Credit
(9.1)
 
Plus: Cash and Equivalents
76.9
 
Total Liquidity
139.2
 
Credit Metrics
Gross Leverage
3.6x
 
Net Leverage
3.1x
 

Notes:
Debt excludes €122.3 million of letters of credit which rank super senior on enforcement. RCF availability reflects €9.1 million of guarantees. RCF margin is subject to ratchet based on the group's leverage ratio. The initial margin was 350bps.
1. Based on €474.9 million of reported net debt

-- Aurelia Seidlehofer 

 
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