PE-backed Cortefiel refinances €1.3bn debt

A total of 80% of the company's creditors have agreed to the third extension of its syndicated loan. Spanish law requires 100% of creditors to agree to the refinancing, but the firm has avoided the opposition of certain creditors by resorting to British law, where Cortefiel's holding company is based. British law requires 75% of creditors to agree, in an effort to avoid a refinancing deadlock.

Hedge funds and an international bank are reported to be among the creditors against the refinancing. The company's main creditors are JP Morgan, The Royal Bank of Scotland, Société Générale and ING.

In 2005, CVC, Permira and PAI partners concluded their public offer for Cortefiel, completed with an acquisition through MEP Retail España. MEP acquired 86.6% of Cortefiel in a deal that valued the firm at €1.44bn. The total amount of debt financing, including €200m of working capital and €75m of capex, reached €1.43bn. The deal ended months of negotiations between the private equity trio, forced back to the drawing board after CVC's original offer of €17.9 per share was countered by Permira and PAI's joint bid of €18.4 per share.

In 2009, the private equity backers injected an additional €100m as part of a refinancing of the company's debt. Under the agreement, Cortefiel's creditors Société Générale, RBS, JP Morgan and ING refinanced the debt, which stood at €940m, down from more than €1bn.

In 2010, the trio approved a €131.4m capital increase that supported the conversion of debt into equity. The capital increase saw the creation of 776.96 million new shares with a nominal value of €0.169. The fresh funding also allowed the company to compensate for the €7.57m in losses made that year.

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• Topics
• Southern Europe
• CVC Capital Partners
• Permira
• PAI Partners
• Spain
• United Kingdom