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Lenders prepare to take control of Fat Face amid the coronavirus crisis

Tom Bottomley
10 June 2020

Fashion and lifestyle brand Fat Face is “close to being taken over by its lenders,” it has been reported.

The lenders will take over the business from Fat Face’s majority shareholder, private equity firm Bridgepoint, according to Sky News.

The company, which has some 215 stores employing more than 2,000 people, is expected to fall under the control of a syndicate of banks and debt funds by the end of the month.

Debt funds including Alcentra and Oak Hill are likely to emerge from the financial restructuring as Fat Face shareholders, while a number of banks, thought to include Lloyds Banking Group alongside Goldman Sachs, are also understood to be getting involved.

Bridgepoint has been Face Face’s majority shareholder since 2007, when it bought it from Advent International for £360m, and Bridgepoint has put in several rounds of funding in to the men’s and women’s casual clothing business since then.

Lenders are believed to have told Bridgepoint that Fat Face would require a further £20m of equity funding for it to retain control. The likely new owners are said to have agreed to inject around £15m of new equity into the company.

It is reported that a debt-for-equity swap would reduce Fat Face's borrowings "sharply" from their current level of about £120m, putting the business on a more sustainable footing.

Fat Face CEO, Liz Evans, is expected to retain her job following the completion of the refinancing package.

Responding to Sky News, Evans said: "I am delighted that we have obtained the support of our lenders. This represents a significant milestone in our journey, and a major endorsement from our stakeholders in the strength of our brand.

"The new money investment and significant deleveraging of our balance sheet will provide the necessary stability to navigate the business through these uncertain times and continue to deliver our strategy to set the business up for the future, with a resilient store estate and an increased focus on e-commerce."

The takeover of the chain by its lenders will be the latest restructuring forced on a big retail player of the UK high street during the COVID-19 pandemic.

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