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    002193   CNE1000008G0

SHANDONG RUYI WOOLEN GARMENT GROUP CO., LTD.

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Unit of SMCP's majority shareholder fails to redeem bonds

09/23/2021 | 12:16pm EDT
FILE PHOTO: An employee arranges a clothing display inside a Sandro luxury clothing store, operated by SMCP Group, in Paris

PARIS (Reuters) -French fashion company SMCP, whose brands include Sandro and Maje, said on Thursday that a unit of its majority shareholder failed to meet a debt obligation, which could open the door to a change in ownership of the retailer.

SMCP shares closed up 8.6% on speculation of it changing hands.

European TopSoho, a unit of China's Shandong Ruyi, defaulted on a bond exchangeable for SMCP shares due Sept. 21, SMCP said in a statement.

If Ruyi does not repay the bond by a Sept. 30 grace period, the Chinese clothing conglomerate, which owns a 53 percent stake in the French fashion retailer, could settle the bond with collateral of at least 28 million shares, said Jefferies analyst Kathryn Parker.

That would correspond to a stake of around 37%, passing the 30% threshold requiring companies to make a takeover offer. A source close to the bondholders said they were seeking reimbursement and not interested in taking over the company.

"SMCP would no longer have Shandong Ruyi as a majority holder, and this would be positive for the shares because it would remove the uncertainty of having a shareholder that's going through default," said Parker, noting possible speculation on the company going completely private.

The analyst added that SMCP would make an attractive target to some of the affordable luxury players in the United States.

Business picked up considerably at SMCP in the first half of the year, with appetite in China for its contemporary French fashion helping the group post sales growth of 54.6% on an organic basis.

Ruyi, which once harboured ambitions of building an empire that would rival that of luxury behemoth LVMH, has struggled under the weight of the debt from acquisitions. Financing difficulties worsened with the outbreak of the coronavirus in China.

Neither Shandong Ruyi nor European TopSoho immediately responded to emailed requests for comment.

($1 = 0.8530 euros)

(Reporting by Sarah Morland and Mimosa Spencer; Editing by Nick Macfie)


© Reuters 2021
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Financials
Sales 2020 786 M 123 M 123 M
Net income 2020 5,09 M 0,80 M 0,80 M
Net Debt 2020 970 M 152 M 152 M
P/E ratio 2020 341x
Yield 2020 0,15%
Capitalization 1 348 M 211 M 211 M
EV / Sales 2019 2,87x
EV / Sales 2020 3,50x
Nbr of Employees 2 479
Free-Float 50,7%
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Managers and Directors
Yuan Shu Du General Manager & Director
Yi Ying Zhang Chief Accounting & Financial Officer
Ya Fu Qiu Chairman
Yan Bao Li Chairman-Supervisory Board
Ke Lin Wang Chief Engineer