Nov 10, 2016
LPC-Jack Wolfskin hires PJT Partners to advise on debt restructuring
Nov 10, 2016
German outdoor brand Jack Wolfskin has hired financial restructuring firm PJT Partners to advise on a potential restructuring of its 365m debt following news that next year's earnings were likely to be half what was expected, sources close to the situation said.
Deloitte's is putting together an internal business review for the Blackstone-owned company, which is due to be published by November 30. Once that has been digested creditors are likely to start tabling debt restructuring proposals in the January, one of the sources said.
Creditor financial advisers could be in place as early as next week, he said.
Blackstone, PJT Partners and Deloitte declined to comment.
The company has been struggling with tough conditions in the retailer sector. It has also faced difficulties in China since it took direct control of the distribution of its products to around 700 Jack Wolfskin stores in the country in 2015.
"They [Jack Wolfskin] buy from China in dollars -- because of recent currency fluctuations they would have had to grow the business significantly and very quickly just to stand still. Retail can get hit very quickly, it's a bit like the oil and gas sector in that respect," a second source said.
The company's loans have plummeted on Europe's secondary loan market since early November when lenders were told that next year's earnings are likely to be half of what was expected. During the call with investors -- to give an annual update -- it was revealed that earnings are likely to come in at around 30m, as opposed to around 60m expected.
Since then, its euro term loan B has fallen to 53.4% of face value on Thursday from 75.4% on November 1 before the investor call. The borrower's euro second-lien term loan was quoted at 18.3% of face value on Thursday, down from 67% on November 1, according to Thomson Reuters LPC data.
The company is expected to need a covenant waiver, but one has not yet been requested, the second source said.
In July, Jack Wolfskin closed an amend and extend of its debt.
Private equity firm Blackstone agreed to buy Jack Wolfskin in 2011 from Quadriga Capital and Barclays Private Equity, backed with 485m of debt.
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