Tom Tailor is close to a refinancing agreement. The clothing group has been able to conclude an agreement with the owner, Fosun, and the banks. As for Bonita, the cause of the problems, a new buyer is being sought.
Refinancing on the way
Tom Tailor's lengthy refinancing negotiations are at last on the home straight, according to Finance Magazin, with majority shareholder Fosun and the banks looking to be on the verge of signing an agreement. It means a light at the end of the tunnel for the German fashion house, which has now been in financial turmoil for years.
Chinese investor Fosun, which owns almost 80% of the shares, is said to have come to an agreement with other lenders about new group financing, which will be in place until September 2022. It looks likely to be an additional capital injection by Fosun and other shareholders, together with a new joint loan.
Tom Tailor expects the final contracts to be signed by the end of October and in order to make it through to then, the bridging loan of 48.5 million euros—which the fashion group has been sustaining since mid-June—will be further extended. According to Finance Magazin, these funds meant that last summer, Tom Tailor was able to place an order for the new autumn/winter collection, thus averting imminent bankruptcy.
Bonita remains a thorn in the side
However, the cause of the problem has not yet been resolved: it was disappointing performances by subsidiary chain Bonita that landed Tom Tailor in trouble at the start of this year. The formula was to be sold to take place this spring, to the Dutch group Vidrea Retail, but just before the acquisition the buyer himself filed for bankruptcy. was due Meanwhile, the group is still on the hunt for a buyer.
By the end of this year, however, Tom Tailor is expected to publish annual accounts—the 2018 annual figures and the 2019 half-yearly report—which should shed further light on the company's situation. What is already known, is that turnover fell by 6% in the first half of 2019, while operating profit fell to a loss of 5.7 million euros; just a year earlier, the company was still in profit to the tune of 26.8 million euros.
Bonita made a strong contribution at the time, with an EBITDA decrease of 17 million euros, but restructuring and advisory costs proved to be high. It is believed that the second half of the year, complete with a thorough peppering of consultancy accounts, will probably push Tom Tailor further into the red.