PE-backed Cortefiel seeks further refinancing

Amy King
04 April 2014

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Spanish clothing retailer Cortefiel, backed by CVC, Permira and PAI partners, is in discussions with creditor banks to refinance its debt via a scheme of arrangement, according to reports in the Spanish press.

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.

The firm received a preliminary agreement last week from its group of creditors, which includes JP Morgan, Societe Generale, RBS and ING.

The refinancing is designed to support the continued international expansion of the firm and takes advantage of improved access to credit and an increasingly positive perception of the Spanish economy.

The company refinanced debt worth €1.3bn in 2012, when a total of 80% of the company's creditors agreed to the third extension of its syndicated loan.

In 2005, CVC, Permira and PAI partners concluded their public offer for Cortefiel, done via 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 creditors Societe Generale, 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.