The Calida Group of Switzerland first invested in Groupe Lafuma last January by acquiring 15.3 percent of the shares and 12.99 percent of the votes at the shareholders' meeting from the family of its chief executive, Philippe Joffard, who has since left. Calida has now proposed to take over Lafuma's control through a two-stage capital increase that would give the French group sufficient equity to complete its reorganization.
The group trades under different brands including Lafuma, Millet, Eider and Oxbow. Its management has already announced the intention to eliminate 161 out of the 650 jobs in France, mainly hitting the operations of Lafuma and Oxbow - a process that will inevitably lead to extraordinary expenses. Observers have noted that Calida implemented heavy staff cuts when it took over Aubade, a French manufacturer of lingerie, in 2005.
As part of its refinancing program, Lafuma Group has now reported that it has agreed to sell its 49 percent stake in its Chinese joint venture for the Lafuma brand to LG Fashion, the Korean company that owns the balance of the shares. LG Fashion had previously bought the rights to the Lafuma brand in South Korea. The Chinese joint venture is believed to be still losing money because it is in an investment mode. Lafuma is getting back the value of its initial investment.
Meanwhile, Calida France has made an offer to Lafuma's board of directors to raise its stake from 15.3 to 50.6 percent for €35 million. In this first stage of the proposed capital increase, Lafuma would issue 2.5 million new shares and sell them to Calida at a price of €14 per share, representing a premium of about 5 percent over the weighted average price of Lafuma shares for the 60 days prior to the announcement of the offer. The offer values Lafuma at €48.9 million, down from its stock market capitalization of €71 million at the end of 2012.
Stock exchange regulations will then force Calida to make an offer for the remaining shares at the same price, but at this stage Calida proposes to launch a second equity increase that would raise an additional €10 million by issuing new shares priced at €9 each, representing a discount of 36 percent on its takeover offer.
This would give the existing shareholders an attractive opportunity to continue to be involved on a pro-rata basis of their current holdings. They have seen the price of their shares drop dramatically after previous capital increases.
Stressing that its proposal confirms its belief in Lafuma's potential for future profits, Calida points out that it is not seeking full ownership of the company, which will continue to trade publicly on Euronext.
Calida's proposal must still be approved by regulatory authorities and by Lafuma's other shareholders at an extraordinary meeting before the end of this year. To give them the necessary elements for their decision, the offer is being reviewed by Accuracy, an independent expert designated by Lafuma's board on Oct. 4. The expert will draw up a report to determine whether Calida's offer is fair. Lafuma's board has agreed to exclusive negotiations with Calida over its offer until Dec. 31. It will decide in the next few weeks whether it should call an extraordinary shareholders' meeting to approve the Swiss company's proposals.
Lafuma has already warned that its results for the financial year ended last Sept. 30 will show very high losses as compared to the €15.2 million loss recorded in the previous financial year. As already reported, the company booked a negative result of €60 million for the first six months ended last March 31, after big write-offs. It had an operating loss of €4.3 million on 15.9 percent lower sales of €102.9 million for the six-month period.
