Helsinki District Court has approved Stockmann plc’s restructuring programme
STOCKMANN plc, Insider information 9.2.2021 at 13:30 EET
By a decision on 9 Febrary 2021, the Helsinki District Court has approved Stockmann plc’s restructuring programme, and the restructuring proceedings have ended. Attorney Jyrki Tähtinen was appointed supervisor of the restructuring programme. The restructuring programme is based on the continuation of Stockmann’s department store operations, the sale and lease-back of the department store properties located in Helsinki, Tallinn and Riga and the continuation of Lindex’s business operations as a fixed part of the Stockmann Group.
The programme had a strong support by the company’s largest creditors and shareholders as well as by the company’s Board of Director and management. By 15 January 2021, more than 90% of the parties representing all restructuring debts have supported the approval of the restructuring programme. In accordance with the program, the company has started preparations for the sales of the properties, the combination of the share series and the conversion of the unsecured restructuring debts and the hybrid bond debt. The company law measures required by the restructuring programme will be discussed at the Annual General Meeting on 7 April 2021.
The company has EUR 433.5 million in secured restructuring debt, approximately EUR 200.6 million in unsecured restructuring debt and EUR 108.1 million in lowest priority debts based on hybrid bond debt, totalling EUR 742.3 million. The unsecured restructuring debts are: EUR 5.5 million in public law debt, EUR 53.5 million in commercial paper debt, EUR 46.1 million in account payable and other debt, EUR 81.7 million in intra-group liabilities and EUR 13.9 million in damages claim debt. For some creditors, there will be separate processes to confirm the final amount of the creditors' receivable.
The key contents of the restructuring programme are as follows:
- The restructuring programme is based on the company continuing its department store operations in all present department stores and online sales in Finland and in the Baltics. The duration of the programme is eight years. The company’s sharpened strategy responds to the changes in the operating environment and consumer behaviour by investing in customer relationships and loyalty, enhancing the customer experience in all channels, fostering a customer-centric culture, and focusing on profitable business operations.
- Lindex’s operations will continue as a fixed part of the Stockmann Group, and its cash flows contribute to cover payment obligations disclosed in the restructuring programme.
- As part of the restructuring programme, the company will sell the real estate assets it owns in Helsinki city centre, Tallinn and Riga. The received realisation result of the company’s real estate assets will primarily be used to pay secured debts.
- The company has negotiated new market-based lease agreements containing smaller premises than in the previous lease agreements for all its department stores and the office space in Pitäjänmäki, Helsinki.
- Altogether 20% of unsecured restructuring debts will be cut, and a repayment schedule disclosed in the restructuring programme has been prepared for the remaining 80%. The cut 20% will be converted, if the relevant creditor so wishes, into the company’s series B shares in a share issue decided upon by the general meeting that will be held after the restructuring programme has been certified by the District Court. The exchange rate is the volume weighted average price of the series B share between 8 April and 27 November 2020, i.e. EUR 0,9106.
- Efforts have been made to build some flexibility into the restructuring programme by converting some of the unsecured debts into the company’s B shares. The remainder of the unsecured restructuring debt is subject to a repayment schedule that has been prepared in accordance with the Restructuring Act. Unsecured creditors can exchange their receivable under the repayment schedule into secured notes issued by the company where the principal will be paid off as a bullet payment after five (5) years have elapsed from the issue. In addition to offering a different risk profile, opting for the secured notes will enable unsecured creditors to sell this financial instrument on the market. Insofar as the company is concerned, the different maturity profile of the secured notes will provide flexibility to the first few years of the restructuring programme. The restructuring programme includes a provision stating that the company is not subject to any obligation to make additional payments to its creditors.
- Altogether half of the hybrid bond loan liabilities will be cut and the remaining 50%, if the creditors so wish, will be converted into the company’s B shares at the proposed exchange rate in connection with the same share issue where the conversion of unsecured debts will take place. If a creditor does not wish to have the uncut of its receivable converted, this share will also fully be cut.
- The company’s A and B share series will be combined in the General Meeting that will be held immediately after the restructuring programme has been certified by the District Court so that each one (1) A share will entitle to receive 1.1 B shares. The combination will improve the liquidity of the share and the company’s ability to secure financing from the market.
- The company’s operative business had become profitable before the coronavirus pandemic began. The company has been able to cover all new payment obligations that have arisen during the restructuring proceedings.
Both the company and the administrator believe that the company will be successful in implementing its new and sharpened business strategy and in completing the restructuring programme.
“We would like to thank the creditors, the administrator and the other stakeholders of the company, as well as Stockmann’s customers and personnel for the support in the very exceptional situation caused by the coronavirus. By systematically following the restructuring programme and our updated strategy, we will, in our view, achieve the best result for all parties and make the company's business profitable again. Our goal is to ensure the iconic Stockmann's future as a forerunner in the areas of fashion, home and beauty,” says Stockmann plc’s CEO Jari Latvanen.
The approved restructuring programme will be made available later in Finnish on the company’s website on the address http://www.stockmanngroup.com/en/corporate-restructuring, and an unofficial English translation will be added immediately when it is ready.
Lauri Ratia, Chairman of the Board of Directors, Stockmann plc, tel. +358 50 2922
Jari Latvanen, CEO, Stockmann plc, tel. +358 9 121 5606
Jyrki Tähtinen, Attorney, Borenius Attorneys Ltd, tel. +358 400 406509