Cosmetics retailer Kiko prepare a debt reschedule after the group was not able to respect its financial covenants on about 200 million euros of gross debt, Il Sole 24 Ore wrote adding that the company mandated Bain & Co as its financial advisor for the deal.
Kiko is owned by the Percassi family, a well-known family of entrepreneurs based in Northern Italy in Bergamo with interests ranging from real estate to Bergamo’s soccer team Atalanta
Of the total debt, about 50 million euros are revolving banking lines with have not been utilized while 130million euros refer to a 2020 6.5% bond placed in 2014 with Generali insurance group for about 100 millions and with another investor for the remaining 30 millions. As for the rest, debt includes loan ficilities by some banks, including BnpParibas and Unicredit. For the debt restructuring deal the banks are supported by their advisor Lazard, while Generali mandated Mediobanca.
Kiko reached 610 million euros in revenues in 2017, with better performances in H2, after Cristina Scocchia joined the company as new ceo, coming from L’Oreal Italia where she used to serve as chairman and ceo. Positive signs are coming this year too. However Kiko’s ebitda is still too low for its debt. Ebitda actually dropped from a pick at 70 million euros in 2014 till below 30 millions.
Most problems came from expansion in the US where Kiko has now decided to close most shops in New York, Miami, Los Angeles and Las Vegas, while a few weeks ago Kiko Usa filed for Chapter 11 bankruptcy protection
Chief Executive Frank Furlan said in papers in Bankruptcy Court in Delaware that the subsidiary of Italy’s Kiko needs to shutter the stores after suffering “extremely high operating costs and continually depressed profits in recent years” due to challenges from online sales and declining mall traffic facing brick-and-mortar retailers.