Cortefiel to get new €600m loan facility

Four banks have underwritten a new loan of around €600m (535.02 million pounds) for Spanish retailer Cortefiel after its private equity owners CVC Capital Partners and PAI Partners agreed to buy out Permira and reinvest in the business.

Credit Suisse , Societe Generale , BNP Paribas and Credit Agricole CIB have underwritten the loan which will replace Cortefiel’s €895m existing debt.

The change of ownership and new loan will help Cortefiel to reduce its debt and remove the pressure of loans that were due to mature in 2018.

The company's existing loans will be repaid at par in September after the deal between CVC, PAI and Permira closes, sources said.

PAI and CVC declined to comment.

As part of the new deal, CVC and PAI will reinvest €400m of equity – from CVC Fund III and PAI Europe VI respectively, one of the sources said.

The private equity trio acquired Cortefiel in 2005 for €1.8bn. The company struggled amid a difficult retail environment in Spain but Cortefiel has appointed new management and trading has improved recently.

Cortefiel has been through several financial restructurings since 2005 - most recently in March 2014 when the business amended and extended around €1.4bn of debt through a scheme of arrangement. Covenant headroom was also extended by 25%.

That deal included a provision that Cortefiel would automatically fall into the hands of its creditors if the company did not hit targets and Ebitda fell below €70m, Thomson Reuters LPC reported.

Cortefiel hired Goldman Sachs earlier this year to sell the business. A group of funds that bought Cortefiel’s debt in Europe’s secondary loan market also mandated restructuring advisers Hoilihan Lokey to represent their interests.
Earlier this year it appeared that the funds could take control of the business if a strong enough bid for the company did not materialise, but an improvement in trading removed the need for a sale.

Cortefiel’s net revenues between March and June of €345m increased up 9.8% from the same time last year and recurring EBITDA also jumped 230% in the same period to €52.1m, which allowed the private equity firms to come up with the new deal.

Cortefiel’s loans were trading at 100.58% of face value on Europe’s secondary loan market on July 26, according to data from Thomson Reuters LPC, after the news that existing lenders will be repaid at face value, or par.
The loans were trading at 65 per cent of face value on January 2 this year.

"We are delighted that CVC and PAI, our long-term partners, have reconfirmed their support for Cortefiel, demonstrating their commitment to the company and its employees," said Jaume Miquel, CEO of Cortefiel.
"We've seen very strong growth and solid performance across brands, and now look forward to continuing our successes, taking advantage of the stable capital structure and strong balance sheet which is being put in place as a result of the transaction,” he added.

Cortefiel operates over 2,000 points of sale in 90 countries with three main brands: Cortefiel, which is aimed at men and women over 40; Springfield, which is targeted at 30-40 year old men and women and Women's Secret, Iberia's largest specialised lingerie chain.

($1 = 0.8530 euros)