Pepe Jeans hires help to refinance €250m debt

By

Eva Gracia Morales

Translated by
Barbara Santamaria

Published
May 7, 2019

Barcelona-based Pepe Jeans, owned by Lebanese multimillionaire Najib Mikati has hired investment bank Rothschild and consulting firm McKinsey to help it refinance its debt.

The clothing label is looking to launch a restructuring plan aimed at bringing its store estate and workforce in line with its financial position, reported Spanish newspaper El Confidencial on Tuesday. Consulting firm McKinsey has been appointed to identify key areas where it can make cost-saving decisions, and is working with group CEO Carlos Ortega on a turnaround plan with the aim of becoming better placed to thrive in the digital era.

Additionally, Pepe Jeans has hired investment bank Rothschild to advise on the refinancing of 250 million euros in bank loans, owed to BBVA, Santander, Caixabank, Bankia and Barclays. The attempt will be third time the group has sought to refinance its debt in the past three years. In the fourth quarter of 2016, Pepe Jeans announced a debt restructuring, and in July 2017 it extended a loan facility until 2021.

Pepe Jeans’ headquarters are located in Spain, it pays taxes in the Netherlands and the UK is its largest market. It was acquired by Lebanese investment group M1 in 2015 for 720 million euros. But the upmarket label’s currently value is estimated to be much lower due to its recent financial struggles, according to auditor PwC.

The fashion group swung into the red in 2017, reporting losses of 13.11 million euros. The figure widened to 13.68 million in the last financial year, according to Spanish media reports, while the Ebitda loss stood at 12.72 million euros. Pepe Jeans struggled to make more sales during the year, and its revenue growth remained flat at 566 million euros.

The group is likely to embark on a store closure programme as part of its restructuring. At the end of March 2018, it had 355 stores, including 219 Pepe Jeans locations, 105 Hackett stores, 29 Tommy Hilfiger sites, 2 Norton spaces and 16 Façonnable shops.