Charterhouse’s Vivarte Said to Breach Terms of Loan Deal

Vivarte SAS, a French fashion retailer owned by Charterhouse Capital Partners LLP, breached the terms on about 2.8 billion euros ($3.7 billion) of loans, according to three people with knowledge of the situation.

Vivarte’s ratio of earnings before interest, taxes, depreciation and amortization was 6.96 times at the end of May, exceeding the limit of 6.05, said the people, who asked not to be identified because the matter is private. The Paris-based company also breached its interest cover ratio, a measure of how easily it can pay interest. That ratio was 2.17 times in May, below the minimum threshold of 2.25.

Marc Lelandais, chairman and chief executive officer of Vivarte, declined to comment on the breach. The company has 600 million euros of cash and no debt maturity issues in the next few years, he said in an e-mailed statement. Officials at Charterhouse in Paris declined to comment, citing company policy.

The owner of the Kookai clothing brand told its lenders about the breach yesterday, the people said. Charterhouse has five business days from the date of the infraction to address the matter, they said.

The retailer got lender backing last year to extend its term loan B, C and second-lien loans to 2018, according to data compiled by Bloomberg.

The company held a call with its 113 lenders yesterday, updating them on business performance since Lelandais’s appointment last year, including actions taken on clothing unit La Halle and shoe-seller Andre, according to the statement.

Charterhouse acquired Vivarte from PAI Partners for about 3.5 billion euros in 2007. The deal was supported by 3.4 billion euros of buyout debt.

To contact the reporter on this story: Julie Miecamp in London at jmiecamp@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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