Lenders Propose Takeover Of Charterhouse’s Vivarte

Lenders are preparing to take control of retailer Vivarte from Charterhouse Capital Partners, in a rare French debt-for-equity swap worth more than €2 billion, the Financial News reported. Oaktree Capital Management, Alcentra and Hayfin Capital Management are among the lenders preparing to convert €2 billion of the company’s €2.8 billion debt package to equity and quasi-equity instruments as part of the restructuring, according to a statement from the company. Under the plan, Charterhouse would be likely to lose more than €500 million on its investment in the French retailer. The restructuring plan envisages lenders injecting €500 million of new money into the business and reducing the company’s hefty debt pile to €800 million. The 12 largest lenders, accounting for more than half of the syndicate, have agreed the proposal with company and presented it to the remaining lenders today. The plan will be put up for a vote over the coming days, according to the statement. The deal is rare because French pre-insolvency law, known as Sauvegarde, generally does not give lenders much flexibility or control in a restructuring process. Charterhouse acquired Vivarte at the height of the boom in 2007 in a €3.4 billion deal. The company first began showing signs of strain last July when it made use of a clause in its loan documentation to avoid the repercussions of a financial covenant breach. Read more.