Hema has reached agreement with a group of shareholders on a deal which the company says will give the high street staple ‘adequate’ financial flexibility to support its future development.
The deal involves the shareholders swapping debt for all the company’s shares, and therefore ousting current owner Marcel Boekhoorn. This will cut the company’s outstanding debt from €750m to €300m, reducing refinancing risk, and cutting interest payments from €50m to circa €30m per year, the company said.
Hema was taken over by Boekhoorn in 2018 but has been loss making since 2013 and was saddled with debt by several private equity owners, most recently Lion Capital. The financial situation only worsened with the coronavirus crisis, with sales down 26% in March and April, although they are now picking up, the company said.
‘The existing level of indebtedness, instituted under previous ownership in 2014, was not sustainable, constrained our ability to execute our strategic plans and would have limited our growth in the future,’ chief executive Tjeerd Jegen said in a statement.
‘Although our business has been resilient in these past months, the Covid-19 pandemic has exacerbated the stress on the group’s financial position, and accelerated the need to deal with our capital structure issues.’
The company also issued a trading update on Monday, saying it forecasts net sales will go down 12.6% to €1.1bn this year, with adjusted ebidta profit down 56.7% at €46m.
Earlier this month, the Financieele Dagblad reported that the Dutch government was considering propping up Hema and has asked merchant bank Lazard to assess what role the state could have.
Government officials have been monitoring the company’s financial health carefully because it is a major employer – with some 9,500 workers in the Netherlands alone.
The company’s current strategy includes seeking strategic partnership with supermarkets as a non-food partner and expanding into new markets.
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