Vivarte Cedes to Lender Control After $3.8 Billion Restructuring

Vivarte SAS said it will be taken over by creditors after they unanimously agreed to restructure the French fashion retailer’s 2.8 billion euros ($3.7 billion) of loans.

Alcentra Ltd., Babson Capital Management LLC, Oaktree Capital Group LLC and Goldentree Asset Management LLC will be “anchor shareholders” after lenders agreed to cut the group’s debt by 2 billion euros and inject 500 million euros of cash, the Paris-based company said in a statement.

“In a difficult market environment, Vivarte, supported by a new group of shareholders who believe in the success of initiated projects, will be able to continue its efforts to modernize and adapt to new market conditions,” Chief Executive Officer Marc Lelandais said in the statement.

Vivarte started restructuring talks in February after failing to persuade lenders to waive loan covenants capping its ratio of debt to earnings. The company, founded in 1896 to sell “elegant but affordable shoes,” was bought by London-based Charterhouse Capital Partners LLP in 2007 in a deal financed with 3.4 billion euros of loans.

Vivarte needed the approval of 100 percent of its lenders for the restructuring proposal to go through without asking for creditor protection. The company missed a July 14 deadline after failing to get enough backing, people familiar with the deal said at the time.

Lelandais has been overhauling Vivarte around the “Fun, French, Fashion” slogan since he joined the group in 2012. The company, which has 4,800 retail outlets, generates an average 3 billion euros in sales each year through its brands including clothing labels Kookai and Caroll, it said in a report in June.

Today’s agreement is being submitted to the Commercial Court of Paris for approval.

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