SMCP Shares Rise As Trustee Begins Stake Sale

By Joshua Kirby

Shares in SMCP SAS traded higher Thursday after a bondholder trustee launched the sale of its equity holding in the company, a move that could trigger a full takeover of the French fashion group.

At 1043GMT, shares traded 4.3% higher at EUR8.09

The owner of fashion brands Sandro and Maje said Thursday that trustee Glas had begun the process to sell a 37% stake in the group's shares over the coming months. Glas took ownership of the shares after SMCP's then majority shareholder, Luxembourg-based holding European TopSoho, defaulted on exchangeable bonds worth 250 million euros ($266.8 million) in the second half of 2021.

According to SMCP, Glas currently holds around 29% of the company's share capital, but the total shares pledged against European TopSoho's unpaid bonds make up a 37% stake. Under French market regulations, any party that comes to control more than 30% of a company is required to launch a bid for the entirety of the shares.

SMCP said it welcomed the planned sale, which it said would allow the company to stabilize its shareholding and concentrate on its business. It is however not yet possible to assess whether Glas's sale will trigger an automatic takeover bid, SMCP said. More than one party might bid for shares, meaning a full takeover isn't guaranteed, analysts at Jefferies said in a note following the news.

European TopSoho is a subsidiary of China's Shandong Ruyi, a fashion group owned by textile magnate Qiu Yafi. Mr. Qiu once had big plans for the group, saying he wanted to build a rival to French luxury-goods giant LVMH Moet Hennessy Louis Vuitton SE. But Shandong Ruyi became mired in debt and was forced to relinquish many of the high-profile Western brands it had bought up, including London tailor Gieves & Hawkes, which was acquired by Frasers Group PLC toward the end of last year.

Following the bond default, SMCP meanwhile became caught in a series of legal spats between Glas and European TopSoho--which still holds a minority stake in the group--with Glas accusing the latter's directors of illegally transferring shares to third parties. Shandong Ruyi didn't immediately respond to a request for comment regarding the stake sale.

An English court found in favor of Glas in October, confirming that the group has been legitimately appointed as a bondholder trustee.

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

(END) Dow Jones Newswires

March 02, 2023 06:00 ET (11:00 GMT)

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