Creditors of textile and fashion conglomerate Shandong Ruyi Technology Group Co. said that the Chinese company defaulted on a loan used to buy Lycra Co. and that they would seek to gain control of the stretchy-fabric maker.
The move is the latest financial challenge for Ruyi, the company stitched together by textile magnate Qiu Yafu, who had promised to challenge the likes of LVMH Moët Hennessy Louis Vuitton SE as a global luxury conglomerate. After a flurry of acquisitions in recent years, Ruyi has retrenched. Some of its creditors have moved to wrest control of brands Ruyi bought.
Creditors related to the Lycra deal include Hong Kong-based finance company China Everbright Ltd.; Lindeman Asia Investment Corp. and Lindeman Partners Asset Management Co., both South Korean private-equity and asset management firms specializing in cross-border deals; and Tor Investment Management Ltd., a Hong Kong asset-management firm.
The group of creditors said in a release Monday that Ruyi had defaulted in May 2019 on a $400 million loan used to buy Lycra, which is based in Wilmington, Del., earlier that same year. Ruyi acquired Lycra for $2.6 billion from a unit of Koch Industries Inc.
Ruyi didn’t respond to questions. A spokeswoman for Lycra declined to comment, saying it was a shareholder matter.
Lycra specializes in stretchy fibers, notably its namesake product, a spandex material invented by DuPont in the 1950s. Springy Lycra quickly replaced rubber as the best way to build elasticity into undergarments, sportswear and other clothes. Its uses expanded over time, and by the early 2000s a liquid version of Lycra was commonly used in nail polish, the company says on its website. DuPont sold the company to Koch-owned Invista in 2004. Lycra’s 2020 revenue was $885 million.
The lenders “have together sought to engage constructively with the Ruyi Group over a period of almost three years to resolve the longstanding payment defaults,” they said in a joint statement. “Despite these concerted efforts no viable or constructive repayment proposal has been received.” The group said its “enforcement action” against Ruyi included appointment of individuals with U.S. firm Alvarez & Marsal Holdings LLC as receivers and that it would “take steps to assume full equity control” of the company. It didn’t provide details.
The Lycra deal was one of the high points of Ruyi’s global acquisition spree. Ruyi has also snapped up companies that own well-known brands like British trench-coat maker Aquascutum, Savile Row tailor Gieves & Hawkes, and Parisian fashion group SMCP S.A.S.
By the end of 2019, the Chinese city of Jining, Ruyi’s hometown, took a 26% stake in the company. Mr. Qiu, once a globe-trotting ambassador for Chinese deal making, has kept a lower profile more recently.
Last month, he was ousted as chairman of SMCP after unpaid creditors took control of the company. Ruyi’s Hong Kong unit Trinity Group Ltd., which controls luxury brands Aquascutum, Cerruti 1881, Gieves & Hawkes and Kent & Curwen, entered liquidation last month after failing to repay loans to banks including Standard Chartered Ltd.
Trinity’s liquidators told potential buyers last week in correspondence seen by The Wall Street Journal that they were pursuing “possible strategic alternatives to a sales process” for Trinity. The liquidators didn’t respond to questions.
This story has been published from a wire agency feed without modifications to the text
Never miss a story! Stay connected and informed with Mint.
Download
our App Now!!
