Relevant Document:FY’21 Report
JPMorgan and investment firm Arena are working with Stifel to sell portions of their debt in Spanish fashion retailer Pepe Jeans, sources told Reorg. The funds are looking to sell about €32 million of the retailer’s loans, comprising holdco and opco debt, and are looking to sell in the 80s, sources noted.
Late last year, JPMorgan and Arena bought into multiple portions of the debt in the 50s and 60s after Pepe Jeans’ banks began reviewing
their positions as the company struggled with a drop in revenue due to the Covid-19 crisis and government-enforced store closures.
Despite the group’s recovery, creditors are now feeling uneasy about the retail market and want to reduce their exposure to the sector, sources said.
Sources said that the company, which is part of All We Wear Group, is achieving its business plan and is on budget. The group said
it expects total sales of €440 million in the year ended March 2022 and upped its EBITDA expectation for the period by 25%.
For the year to March 31, 2021, Pepe Jean’s turnover fell by 26% year over year to €254.9 million, mainly due to the impact of Covid-19. Meanwhile, total group sales fell by 31% year over year to €345.6 million.
A summary of the segment information at March 31, 2021, is below:
Lenders who bought into the debt would now have had a significant portion repaid according to an agreement struck with the company whereby any excess cash above a certain level would go directly to lenders and repay them at par. Cash as of March 31, 2021 stood at €38.5 million.
As of March, 31, 2021 the syndicated loan structure amounted to €245.7 million and comprised:
- An €85.2 million tranche A1 at the opco level;
- An €8 million tranche A2 at opco level;
- A €105.8 million tranche B at holdco level; and
- A €46.6 million new money tranche.
In July 2020, Pepe Jeans completed a €200 million refinancing with its banking consortium, according to its accounts. The banks also agreed to renew the group’s €56.8 million working capital facility for five years. The refinancing was sanctioned through Spain’s homologación
process in September 2020 with the group’s owners injecting €30 million into the company as part of the agreement. The company also secured €46.6 million of new bank financing.
In 2021, Pepe Jeans had 194 stores. The reduction
of the number of stores of the brand Pepe was mainly due to the closure of stores in France, Spain, Italy Mexico, Portugal, India and Poland.
Pepe Jeans is owned by Lebanese conglomerate M1 Group and L Capital Asia, a fund owned by luxury brands group LVMH. The owners acquired the business for €720 million
in 2015 and created a new Netherlands-headquartered holding company.
The holding group is called All We Wear Group and owns Hackett London and Façonnable brands. It also owns licenses for Calvin Klein and Tommy Hilfiger brands in Spain.
All We Wear Group and JPMorgan did not wish to comment. Arena and Stifel did not respond to Reorg’s request for comment.
– Andrew Ross, Lucía Camblor