By guest authors Katie Linsell and Ellen Proper from BloombergQuint
Dutch retailer Hema filed for Chapter 15 court protection in the U.S. in the latest step of a debt restructuring as the popular local firm prepares for its sale. Chapter 15 shields foreign companies from lawsuits by U.S. creditors while they reorganize in another country. The filing came late Wednesday, the same day that Hema’s restructuring plan received support from the vast majority of its senior-ranking bondholders in a UK court process.
For Hema, a department-store chain beloved by Dutch consumers for its colorful birthday cakes, smoked sausages and homeware, the move is part of a plan to reduce its debt and manage the impact of the coronavirus pandemic. A group of creditors effectively took over the business in June and are looking to sell it to a new owner, with final binding bids due by Sept. 14, according to the U.S. filing.
The sale process started in late June when Hema approached 57 “interested parties” which were later reduced to 15 potential suitors, the filing states. Financial advisor Moelis & Co. is managing the process. The race for Hema is now between U.S. investment company Flacks Group and a consortium led by Amsterdam-based private equity firm Parcom Capital, according to Michael Flacks, chairman and CEO of Flacks Group. Parcom’s group includes Marcel Boekhoorn, Hema’s former owner who lost control to bondholders, and the Van Eerd family that owns Dutch supermarket chain Jumbo, Dutch newspaper FD reported previously.
The company has more than 700 stores and employs about 20000 people. A spokeswoman for Hema didn’t respond immediately to a request for comment on the U.S. bankruptcy proceedings and previously declined to speak about the bidding process. Representatives for Parcom didn’t respond to requests for comment. Spokespeople for Boekhoorn’s investment vehicle, Ramphastos, and the Van Eerd family declined comment.
There is also interest from Hema shoppers who have set up a campaign under the label “The Only Dutch Alternative” to buy the company, though it’s not clear what their chances are. More than 17000 people have signed up to contribute to the campaign with pledges of support rather than cash deposits, according to Anna Grebenchtchikova, the group’s financial lead. The group is expected to issue shares as part of its bid and plans to complete the listing by next week, she said.
The owners of Jumbo are reportedly part of the Parcom bid, but the chain itself isn’t interested in owning the retailer, as it already has an agreement to stock Hema items in its stores. “The synergy we have with Hema is already in our commercial cooperation,” a Jumbo spokeswoman said. If the front-running bidders turn out not to be suitable, the creditors must commit to owning Hema for a year before they can seek to exit again, according to analysts at CreditSights. They probably want to dispose of the business quickly, the analysts wrote.