German cosmetics and perfume retailer Douglas is preparing for a financial restructuring in 2021 as the COVID-19 pandemic hits its business and its debt nears maturity, two people familiar with the matter said.
Once the important Christmas season is over, the company will kick off talks with its creditors on options including refinancing, a deal to amend and extend maturities or a debt-for-equity swap, the sources said.
Douglas' outstanding loans and bonds mature from February 2022. In total, the company's net debt stood at €2.1 billion as of June 2020.
"We will therefore begin refinancing on a regular basis in the coming year," a Douglas spokesman said, declining to comment further.
Additional Equity
The company's owner, private equity firm CVC, is willing to inject additional equity, if needed, to safeguard its investment, the sources said, adding that Lazard is acting as restructuring adviser.
CVC and Lazard declined to comment.
Earlier this year, CVC started preparations for an initial public offering or sale of Douglas, but the pandemic all but halted the plans as sales crashed during the lockdown and talks of a state bailout stalled in May.
Douglas has expanded its online business in recent years and is hoping that side of the business can make up for a 48% decline in sales at its 2,400 stores across Europe, which led to a group loss before interest, tax, depreciation and amortisation of €7 million in April through June.
E-commerce sales in the fiscal third quarter leapt 70% year-on-year to reach €225 million, or 40% of total revenue.
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