SMCP parent may be forced to cede control after default of obligation – Update

By Joshua Kirby

A change of control at SMCP SAS loomed closer on Wednesday as the French fashion group reported the possible sale of a stake held by its majority shareholder, which defaulted on bonds worth $ 250 million. euros ($ 290 million.)

SMCP said on Wednesday that it was informed that European majority owner TopSoho, a Luxembourg holding company of Chinese conglomerate Shandong Ruyi Technology Group, had defaulted on the bonds maturing in late September. Underlying the bonds are shares of SMCP representing 37% of the company’s share capital, with the swap commitment enforceable from October 19, SMCP said.

The bond trustee GLAS, for its part, informed the French Markets Authority that in view of the default, it was entitled to instruct 35 million SMCP voting rights, or 29% of the total. If GLAS executes the swap promise from Oct. 19, it will appoint a receiver to sell the pledged shares to a third party, SMCP said.

European TopSoho owns 53% of the shares of SMCP. Such a transfer would therefore result in the transfer of control of the group.

SMCP said the situation does not put its own finances or operations at risk.

Shandong Ruyi said on Tuesday that he had been informed by the trustee of the obligations of the default. “The company is actively reviewing its options with respect to the current situation and will keep the market informed,” said Shandong Ruyi, without going into details.

According to SMCP, European TopSoho has taken legal action against GLAS. European TopSoho did not respond to a request for comment from the Wall Street Journal.

A change in ownership would be good news for SMCP, analysts at Jefferies said. A split with Shandong Ruyi, who has struggled with debts and poor credit scores after a spending spree on Western fashion brands, would reduce SMCP’s risk profile, allowing investors to focus on its underlying strengths , including a good investment in its brands and impressive digital. sales, the investment bank said.

Following Shandong Ruyi’s comments on Tuesday, shares of SMCP climbed nearly 8%. Wednesday afternoon, they were trading down more than 5% to 6.91 euros.

Write to Joshua Kirby at [email protected]; @joshualeokirby

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