Vivarte enters debt restructuring talks

LONDON, England - French retailer Vivarte has made a start to restructure its burdensome debt pile by entering a four-month conciliation process, the company announced in a statement on Monday.

A mandataire ad hoc was previously appointed to mediate talks between Vivarte and its lenders after Vivarte failed to get agreement from two-thirds of its lenders to suspend loan covenant tests by a deadline of January 22. In response, lenders appointed financial advisory firm Houlihan Lokey.

Last month, Vivarte said during a first meeting between its lenders and the mandataire that the company would hold off making any payments on its debt.

Vivarte has now entered into a conciliation process to restructure its debt. The mandataire has become a 'Conciliateur' and will negotiate a way forward between the company and its lenders.

At the same time, 90 percent of lenders have agreed to a suspension of Vivarte's next debt payment, the statement said. The payment was due this month.

One likely outcome of the conciliation process is a write down of some of Vivarte's debt in return for equity. Charterhouse is expected to stay involved in the company, banking sources said.

Vivarte was bought by Charterhouse in 2007 backed by leveraged loans totalling 3.43 billion euros ($4.75 billion). It has been hit by an unfavourable economic and consumer environment in France and previously breached its loan covenants.

$1 = 0.7214 euros