RCF lenders to Oriflame have hired Linklaters as legal advisor for the upcoming debt talks with the Swedish cosmetics group, while bondholders are working with Sullivan & Cromwell, sources told Reorg. Latham and Watkins is the legal advisor to the company, the sources said.
RCF lenders include HSBC, Goldman Sachs and Swedish bank SEB, sources added.
In the fourth quarter of 2023, the group had drawn €20 million from its €100 million RCF due October 2025, but has since repaid the drawn amount, giving it access to the full facility again as of January, as
reported. In addition to the revolver, the group had €80.6 million in cash and cash equivalents at the end of 2023.
Oriflame’s bonds plunged to distressed levels in 2022 due its significant exposure to Russia and have since been on a decline over concerns around the group’s ability to improve its performance before 2025 refinancing of $550 million 5.125% bonds and €250 million 4.25% bonds, both due in May 2026.
Management,
advised by Rothschild & Co., is
aiming to complete a transaction to tackle its debt maturities by the first quarter of 2025. Bondholders are also working with Moelis, as
reported.
In the near term, the group
expects to return to 15% adjusted EBITDA margin, the level last reported in 2021 prior to the Russian invasion of Ukraine, which disrupted several of the group’s key markets, triggering a decline of members. It also expects to deliver cost savings of around €45 million through its turnaround plan and €100 million of full-year EBITDA, up from €39 million in 2023.
During an earnings
call on Wednesday, Feb. 21, management stressed that the advisory mandate is not for a financial restructuring but an early step toward a refinancing. CFO Carl Rogberg added that Oriflame does not expect to draw on its RCF.
Oriflame’s 2026 bonds dropped a couple of points to mid-20s, according to Solve Advisors, after the group published its fourth-quarter results and management refused to give investors color on its new strategic marketing and member recruitment initiatives.
Oriflame’s capital structure is below and a waterfall analysis from Oct. 31, 2023, can be found
HERE:
Oriflame - Pro Forma as of 01/31/2024
|
12/31/2023 |
|
EBITDA Multiple |
(EUR in Millions) |
Amount |
Price |
Mkt. Val. |
Maturity |
Rate |
Yield |
Book |
Market |
|
€100M Super Senior RCF due 2025 1 |
- |
|
- |
Oct-2025 |
|
|
|
Total Super Senior Secured Debt |
- |
|
- |
|
|
|
$550M Senior Secured Notes due 2026 2 |
497.7 |
|
497.7 |
May-04-2026 |
5.125% |
|
|
€250M Senior Secured FRNs due 2026 3 |
250.0 |
|
250.0 |
May-04-2026 |
EURIBOR + 4.250% |
|
|
Total Senior Secured Debt |
747.7 |
|
747.7 |
|
19.2x |
19.2x |
Lease Liabilities |
32.4 |
|
32.4 |
|
|
|
|
Total Lease Liabilities |
32.4 |
|
32.4 |
|
20.0x |
20.0x |
Total Debt |
780.1 |
|
780.1 |
|
20.0x |
20.0x |
Less: Cash and Equivalents |
(76.6) |
|
(76.6) |
|
Net Debt |
703.5 |
|
703.5 |
|
18.0x |
18.0x |
Operating Metrics |
LTM Revenue |
750.9 |
|
LTM Reported EBITDA |
39.0 |
|
|
Liquidity |
RCF Commitments |
100.0 |
|
Plus: Cash and Equivalents |
76.6 |
|
Total Liquidity |
176.6 |
|
Credit Metrics |
Gross Leverage |
20.0x |
|
Net Leverage |
18.0x |
|
Notes:
Capital structure is post-IFRS 16, and covers the entire Group, including the Walnut entities. EBITDA is the company's adjusted figure, as reported. Cash and cash equivalents were €80.6M as of Dec. 31, 2023.
1. Interest equal to Euribor +200 bps to 300 bps depending on leverage.
2. $550M at a rate of 5.125%, swapped EUR interest rate 3.53%.
3. €250M at a rate of 4.25% + 3 month Euribor, with €150M notional swapped into fixed EUR with margin 0.14%.
Pro Forma: Capital structure is pro forma a €4M repayment of the RCF in January, cash and cash equivalents have been adjusted accordingly. |