Private equity firm Blackstone has reached an agreement in principle to hand over control of German outdoor brand Jack Wolfskin to a group of its lenders in a debt for equity swap, sources close to the situation said.
Under the terms of a lender-led debt restructuring plan, lenders will write off €80m and reduce Jack Wolfskin’s debt to €210m from €330m (US$350.06m)and inject €25m into the business in return for ownership, one of the sources said.
Blackstone has verbally agreed to the deal and a co-ordinating committee of lenders is seeking 100% support from the wider lender group for the plan, the sources said. The deal is expected to be closed by summer.
“We are not quite there, nobody has signed anything yet – the lawyers are working on the documentation, it will take another couple of months to bring it all together, but we hope to have it implemented by the end of the first half” one of the sources said.
Negotiations are still ongoing with a group of second lien lenders who are out of the money on their €45m investment, he said.
“The second lien lenders have acknowledged that they are out of the money but there is the payment of some expenses which is still being discussed,” he said.
Jack Wolfskin’s senior debt has been sold to funds. In February a lender coordinating committee including funds H.I.G Capital, CQS and Sankaty put forward the plan for the debt for equity swap.
The company also launched an M&A process in January to see if there were any viable buyers for the business, which has not produced any serious bids so far.
“The M&A process is not the focus anymore. Some parties did look at the business but none of the bids would have cleared the €330m of debt,” the source said.
In January Jack Wolfskin agreed a circa six-month waiver with its lenders to give it time to agree a restructuring deal. PJT Partners is advising the company on the restructuring, while lenders have hired Houlihan Lokey and law firm Kirkland & Ellis.
Jack Wolfskin has been struggling with tough conditions in the retail sector and 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.
In July 2015 it amended and extended its debt, which included a €75m capital injection from Blackstone. Blackstone agreed to buy Jack Wolfskin in 2011 from Quadriga Capital and Barclays Private Equity, backed with €485m of debt.