Kirkland & Ellis is advising the ad hoc group of HEMA’s bondholders in relation to the Dutch retailer’s restructuring including debt for equity swap, deleveraging, and scheme of arrangement. HEMA is one of the Netherlands’ largest and oldest retailers. It operates over 775 department stores or franchises in 12 countries, including Luxembourg, France, Germany, Spain, the UK, the UAE and Qatar, and has over 19,000 employees.
The scheme forms part of a wider, multi-jurisdictional financial restructuring designed to deleverage the group’s capital structure and provide new money to help it survive the store closures and reduced footfall caused by the Covid-19 pandemic.
The terms of the single-class scheme restructure €600m in senior secured floating rate notes due in 2022 (the “Notes”) by i) discharging 50% of the Notes in return for equity instruments and payment-in-kind notes issued by a new holding company; and ii) amending the terms of the remaining €300 million of the Notes. Scheme creditors were also offered opportunity to participate in a €42 million new money facility to be made available to the company on completion of the restructuring.
The Notes were originally governed by New York law and issued by a Dutch SPV. Jurisdictional eligibility for an English scheme was created by incorporating an English company (which became co-issuer of the Notes) and changing the governing law / jurisdiction of the Notes to English law / jurisdiction. The scheme was overwhelmingly approved by 100% of Noteholders who voted at the scheme meeting, on 19 August (with turnout of over 98% by value).
It was sanctioned by the High Court in London following a hearing before Mrs Justice Falk on 24 August.
The enforcement sale of the group to a new holding company was approved by the Dutch court on 11 September. In addition, the U.S. Bankruptcy Court granted recognition of the scheme of arrangement as a foreign main proceeding under Chapter 15 of the U.S. Bankruptcy Code, on 11 September. The restructuring (including the enforcement sale of the group) is expected to complete in late September / early October.
Given the forthcoming introduction of the new Dutch scheme process, this may be the last time that a Dutch company uses an English scheme of arrangement.
The Kirkland team was led by restructuring partners Karim Kassam, Kon Asimacopoulos and Partha Kar, with associate Ian Clarke, transactional partner Aprajita Dhundia and associate Rachel Greenhalgh, capital markets partner Tim Volkheimer, derivatives partner Jaime Madell, and tax partner David Irvine with associate Nathan Langford.