Debt woes crash China Inc. luxury dream

08-Oct-2021 Intellasia | Reuters | 5:02 AM Print This Post

China’s debt woes have reached the Champs-Elysees. A unit of conglomerate Shandong Ruyi which controls 53 percent of accessible fashion retailer SMCP (SMCP.PA) has defaulted on 250 million euros of bonds exchangeable into the French company’s shares, according to a SMCP statement. Bondholders including asset manager BlackRock (BLK.N) and buyout firm Carlyle (CG.O) can stake a claim to a 37 percent stake in the group, which owns the Sandro and Maje brands, though Shandong Ruyi’s unit is fighting back.

For SMCP’s other investors, a change should come as a relief. Shandong Ruyi Chair Qiu Yafu’s much-publicised ambition to create a Chinese version of LVMH (LVMH.PA)rested on shaky grounds. The group borrowed heavily to snap up SMCP and a raft of minor brands including Cerruti 1881 and Aquascutum. Debt concerns have surfaced ever since. Two of its purchases, Israeli tailoring specialist Bagir and Japan’s century-old apparel maker Renown, filed for bankruptcy last year. Since listing in Paris in 2017, SMCP shares have lost about two thirds of their value. For its hard-pressed minority shareholders, a change of ownership would represent the best possible outcome.


Category: China

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