Creditors of debt-laden fashion conglomerate Shandong Ruyi Technology Group will seek control of Lycra after Ruyi defaulted on a US$400 million loan it took from them to buy the fibre maker.
A statement from the creditors on Monday said that Ruyi, known for its ambition to become the LVMH of China, has been able to repay the Lycra loan since May 2019.
The lenders include Hong Kong-based China Everbright Limited and Tor Investment Management, along with Seoul-based private equity firm Lindeman Partners and its affiliate Lindeman Asia.
Their steps to assume full equity control of Lycra include the appointment of receivers for the assets of Lycra’s parent.
Ruyi and Lycra did not respond immediately to requests for comment on Tuesday.
Ruyi bought control of Lycra from US conglomerate Koch Industries for $2.6 billion in 2019, borrowing about $1 billion for the deal.
Reuters reported in 2020 that some of Ruyi’s creditors had hired a restructuring specialist to sound out potential buyers for Lycra after weakening financial performance of the manufacturer of the eponymous stretchy material fears of a loan default.
However, no deal materialised and Ruyi decided to look for alternative means of rescue.
Ruyi, the roots of which are in the textiles industry, began a buying spree in 2015 that included SMCP, Aquascutum and Savile Row tailor Gieves & Hawkes, aiming to establish itself as a luxury fashion house.
But the Chinese conglomerate has struggled under the weight of its debts and its financial difficulties worsened with the Covid-19 pandemic.
French fashion group SMCP last month removed five board members associated with Ruyi after the conglomerate defaulted on bonds used to acquire shares in the French business.
- Reporting by Selena Li; Additional reporting by Sophie Yu in Beijing; Editing by David Goodman, of Reuters.