Debt woes crash China Inc. luxury dream
07/10/2021 10:05
(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
MILAN, Oct 7 (Reuters Breakingviews) - China’s debt
woes have reached the Champs-Élysées. A unit of conglomerate
Shandong Ruyi which controls 53% 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 urn:newsml:reuters.com:*:nL1N2R20P1 to a 37% 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 Chairman Qiu Yafu’s much-publicised
ambition to create a Chinese version of LVMH LVMH.PA rested on
shaky grounds https://www.breakingviews.com/considered-view/chinas-wannabe-fashion-empire-unravels.
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 https://www.reuters.com/article/us-health-coronavirus-japan-renown-idUSKBN22R1NP,
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. (By Lisa Jucca)
On Twitter http://twitter.com/breakingviews
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(Editing by Neil Unmack and Karen Kwok)
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