Greek jewellery maker Folli Follie is in talks with three bondholders hoping to firm up a restructuring plan “within days”, a senior company source told Reuters on Friday.
The step is key for the company, which has debt of about 430 million euros due this year and in 2021, to avoid collapse.
Along with its luxury jewellery trademark, Folli distributes international apparel brands in Greece, including Nike and Calvin Klein. It employs 5,000 people in its home market and abroad, including in China and Japan.
A hedge fund report in May suggesting the company misrepresented sales sent Folli’s shares into a tailspin, prompted a legal investigation, fines from the Greek securities watchdog and the resignation of the company’s founders.
An initial audit into its Asian operations months later showed massive discrepancies in its 2017 financial statements. Since then, Folli has appointed new board members.
The source told Reuters that Folli has also been in talks with asset managers Kyma Capital, Oasis and Mercier Vanderlinden, which represent 27 percent of a 249.5 million euro bond due this year, regarding its business overhaul and financing.
Folli hopes the parties will agree on the final details of the so-called term sheet “within days”, the source told Reuters on condition of anonymity.
The source said the three bondholders could offer 41 million euros ($46.46 million), if the group won an appeal to recover assets, worth more than 100 million euros, that money laundering authorities blocked as part of a judicial investigation.
The bondholders in turn would receive a fee of 67 million euros and could eventually acquire more than 80 percent of Folli’s shares, the source said.
Founder Dimitrios Koutsolioutsos holds a 35 percent stake in Folli. China’s Fosun owns 16.4 percent, data from Refinitiv showed.
The term sheet also needs to be approved by at least two thirds of creditors and shareholders and Folli needs to have its 2017 financial statements audited before it submits its overhaul plan to a Greek court.
The latest audit of its 2017 statements is expected to be concluded by the end of March, the source said.
“In theory, the plan should be ready for submission to the court in the beginning of April,” the source said.
But approval by the court could take several months and to cover its financing needs, Folli is exploring the divestment of assets including a property in Hong Kong and a helicopter, to raise 20-30 million euros, the source added.
Folli is meeting its obligations as an employer but with its credibility hurt, it is struggling to secure supplies, the source said, adding that most suppliers want payments in advance.
“They refuse to pack half of a box if they are not paid upfront,” the source said.