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Terminus: HEMA Update

24 August 2020 by jbchevrel

Quick update on the Dutch department store chain HEMA B.V. The retailer has sought protection from its U.S. creditors to complete a financial restructuring in Europe that aims to trim about €400M debt from its balance sheet. A HEMA affiliate filed for protection under Chap. 15 last Wednesday, in the US Bankruptcy Court of New York. Chap. 15 is a section of the bankruptcy code dealing with cross-border restructurings. HEMA announced subsequently that the vast majority of senior secured bondholders voted in favor of the scheme of arrangement to restructure debt. Indeed, 133 creditors representing c98% of the floating-rate notes supported the plan. The company acknowledged an “important milestone”. The EMEA DC met on Friday to discuss whether a FTP event had occurred with HEMA Bondco I B.V. due to grace period expiring after the non-payment of interest on the SSN 22s. The DC received confirmation that the relevant interest payment was not made and that the grace period had expired, so they determined that HEMA Bondco I B.V. had FTP, date August 14. We don’t have the auction date yet. Today a UK court approved HEMA’s restructuring plan. HEMA CDS (HEMA BondCo I B.V.) point to the FRN Jul22s which closed at roughly 69% today. Reversely, the CDS don’t cover the lower-ranked notes that are quoted closer to zero (8.5% Jan23s closed about 2% price today). We have CDS in low 30s. For reference, at the peak of the crisis (early April), the FRN 22s came as low as 30% and CDS came to 55%, displaying some basis.