SMCP Parent Defaults on Bonds; Operations Safe, Company Says

   By Joshua Kirby 
 

SMCP SAS said Thursday that it has been notified of a credit default by its controlling shareholder, but stressed that the situation doesn't put the company at risk.

The French fashion group said bond trustee GLAS had notified it of a failure by European TopSoho, a subsidiary of struggling Chinese apparel conglomerate Shandong Ruyi Technology Group, to redeem bonds worth 250 million euros ($292.2 million) by their maturity date on Tuesday. The Luxembourg-based holding company has until Sept. 30 to remedy the default, SMCP said.

The bonds, which are exchangeable into SMCP shares, are underwritten by shares representing 37% of the group's share capital, according to SMCP. European TopSoho holds around 53% of the group's shares.

The development doesn't put into question SMCP's financing and operations, the company said.

Last week, shareholders represented by business-ethics group Gouvernance en Action wrote to the company setting out their concerns over what would happen in the case of such a default by the controlling shareholder.

"The situation is alarming for the future of SMCP, its minority shareholders, its employees and all other stakeholders," GeA's Fabrice Remon said in the letter, which was also sent to the French capital-markets authority.

European TopSoho and Shandong Ruyi did not respond to requests for comment.

Write to Joshua Kirby at [e-mail]; @joshualeokirby

(END) Dow Jones Newswires

September 23, 2021 02:52 ET (06:52 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.