Fri 06/26/2020 08:36 AM
SMCP bondholders are trying to form a group ahead of a potential plan to accelerate their claims after parent company European TopSoho missed a coupon payment, sources told Reorg. The bondholders are in discussions with several law firms, although no formal pitching process has yet taken place, sources added.

The 4% coupon payment on the retailer’s €250 million convertible bonds maturing in 2021 was due on Monday, June 22, and has a five-day grace period that ends today. Chinese textile company Shandong Ruyi Technology Group has a 53.7% stake in SMCP and bondholders could enforce on their collateral if its majority owner does not make the payment.

The bonds have a pledge over 31% of SMCP’s shares and are guaranteed by Forever Winner International Development, a Hong Kong entity that is wholly owned by Shandong Ruyi, according to the OM seen by Reorg. SMCP shares are quoted at €4.54 today, down from €5.20 on Monday and €9.60 six months ago.

The company is arranging a call with bondholders and requested a standstill last week. Shandong Ruyi has formally engaged TTB Partners and Zerobridge Partners as financial advisors, as reported.

Shandong Ruyi is separately facing a $10.425 million semiannual coupon payment next month under its $300 million 6.95% senior notes due July 5, 2022, as reported.

SMCP had €1.137 billion of net debt and was 4x levered through the holdco on a post-IFRS 16 basis as of the end of 2019. The retailer has a €200 million unsecured RCF due 2024 and a €265 million unsecured term loan maturing that same year. On a March 25 earnings call, management said the company has a net leverage covenant of 3x net debt to EBITDA (excluding IFRS 16) on its revolver. The group had 2.2x net leverage on a pre-IFRS 16 excluding the holdco convertible bond.

SMCP’s capital structure including European TopSoho bond is below:




EBITDA Multiple

(EUR in Millions)






€200M NEU Commercial Paper Program





€40M Bridge Loan 1



EURIBOR + 2.000%


Bank Overdraft Facility





€200M Unsecured Revolving Credit Facility due 2024 2



EURIBOR + 1.750%


€265M Unsecured Term Loan due 2024 3



EURIBOR + 2.150%


Total Unsecured Bank Debt



IFRS 16 Lease Liabilities





Total Lease Liabilities



€250M Secured Convertible Bond due 2021 4





Total HoldCo Secured Bond Debt



Total Debt



Less: Cash and Equivalents



Net Debt



Operating Metrics

LTM Revenue








RCF Commitments



Other Liquidity



Plus: Cash and Equivalents



Total Liquidity



Credit Metrics

Gross Leverage



Net Leverage




Market data as of June 25. Capital structure is post IFRS-16. LTM EBITDA is the company's adjusted figure, as reported. HoldCo convertible bond excluded from SMCP SA reported financial debt. Other liquidity includes undrawn amounts under the bank overdraft facility.
1. Matures in Sept. 2020, with optional 6 month extension. Unknown if secured.
2. Calculated as total non-current financial debt (excluding overdrafts) less term loan. Interest rate not disclosed.
3. Interest rate not disclosed. Repayable in €55M instalments in May 2021, May 2022, May 2023, with remaining payable on May, 9 2024.
4. Secured convertible bond, issued by European TopSoho Sarl. Convertible at €22.299. Secured by Issuer's present and future rights, title and interest against the Custodian, by an agreement of security of all the Issuer's present and future rights, title and interest in and to the cash account and securities account.

The TopSoho bond is backed by 53.7% stake in equity of SMCP.

The retailer secured a €140 million guaranteed loan from the French state and obtained a suspension of its financial covenants for 2020 earlier this week. In return, it committed to not distribute any dividend for 2020 and 2021, which sources noted will further tighten controlling shareholder European TopSoho's liquidity.

The company had previously communicated that its profits and sales had been severely hit by the outbreak of the coronavirus. SMCP said in April that it fully drew its RCF in March and a liquidity position of more than €200 million at the end of the first quarter to face the crisis.

SMCP’s consolidated sales reached €228.7 million in the first quarter of 2020, falling 20.4% year over year on an organic basis. Reported sales dropped 16.7% year over year, reflecting the impact of the Covid-19 pandemic on the business. 

-- Jaishree Kalia
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