The owner of French fashion company SMCP said that is has started legal proceedings against companies serving bondholders that were reportedly attempting to take control of SMCP for a low price. The news was reported by Reuters.
TopSoho, a European company and a unit of Shandong Ruyi, which has a 53 percent stake in SMPC, failed to meet a 250-million-euro debt obligation last month exchangeable for company shares. This left the door open for bond owners, including BlackRock and Carlyle, to take a 37 percent share in SMCP.
TopSoho said they have begun legal proceedings to identify parties they say, “conspired by unlawful means to injure and cause loss to the company by forcing it into a position whereby the conspirator(s) could acquire or obtain control of SMCP SA at an undervalue.”
Proceedings began in a UK court against several companies including Glas SAS, a company serving a group of bondholders, Carlyle affiliate Celf Advisors LLP, and BNP Paribas Trust Corporation UK Limited, which is acting as a custodian for the SMCP shares that were pledged as collateral for the bonds.
Glas has already stated due to TopSoho not paying their bond, they are now able to exercise voting rights equal to 29 percent of SMCP Capital. Glas has also said they had no intention of launching a takeover of SMCP. SMCP has said the current situation doesn’t affect their day-to-day finances and operations.
Shandong Ruyi, TopSoho’s parent company, went on a fashion buying spree in 2018 which included Cerruti 1881, Aquascutum, and Gieves & Hawkes. Their goal was to become a luxury fashion conglomerate, however the crippling debt they acquired with these acquisitions has been crushing them.
Bondholders are expected to look for a buyer for the shares and given SMCP’s popularity with brands like Sandro and Maje under their belt, they could be a handsome acquisition for an investor or company looking to fatten up their fashion portfolio. Transfer of shares from bondholders could begin on October 19.
Update 11 October 2021: The headline of this article has been changed to reflect that TopSoho is the actual party to begin legal proceedings