Rapala VMC, the big Finnish-based fishing-tackle company, has announced a group-wide plan to save €10 million in costs by generating efficiencies and internal synergies, lowering operating expenses and reducing net working capital.
It will also be centralizing its distribution in Europe. To this end, Rapala has appointed Jean-Philippe Nicolle to the executive committee, naming him executive vice president and head of European distribution. He will assume these duties on Jan. 1, 2020. Nicolle has been with the Rapala group since 1997 and is current the head of distribution for Central Europe.
For Louis d'Alançon, Rapala's chairman and interim chief executive, the restructuring program is designed for ensure growth while accompanying the company's transformation following major structural changes: the reorganization of its 25-year-old distribution agreement with Shimano (SGI Europe Vol. 30 N° 35+36 of Oct. 18, 2019) and its recent acquisition of a 49 percent stake in DQC International, owner of 13 Fishing, an American brand of rods and reels. The takeover has been financed mainly by through the transfer of 225,000 treasury shares in Rapala to DQC's owners.
The savings relate mainly to Rapala's European businesses and distribution and its manufacturing of lures in Asia. The restructuring measures will be negotiated locally, country by country, and from the second half of 2019 will appear in the company's books under “items affecting comparability.” Rapala expects gradual improvements from 2020 and full effects by about 2022.
The strategy apparently aligns with former proposals made by Jussi Ristimaki, who was Rapala's CEO until September and now serves as an adviser to the board. Speaking to Angling International, Ristimaki said the board did not so much disagree with his management as wish to speed things up.
Meanwhile, last month Rapala issued a euro-denominated hybrid bond in the amount of €25 million. The interest rate is fixed at 5.25 percent per annum until the reset date of Nov. 13, 2021, after which the rate will be determined on each second anniversary of the issue date. The bond specifies no maturity date, but Rapala may begin redeeming it precisely two years from the issue date of Nov. 13, 2019.
OP Corporate Bank was the sole lead manager for the transaction, with Hannes Snellman Attorneys serving as Rapala's legal counsel. The hybrid bond does not confer shareholder rights or dilute the holdings of Rapala's current shareholders.
According to Jan-Elof Cavander, Rapala's chief financial officer, the bond was oversubscribed, which “sends a strong message” of investor confidence. He said it will strengthen the company's capital structure and financial position.
The Rapala group enjoys the largest distribution network in the fishing-tackle industry and does most of its manufacturing in Finland, France, Estonia, Russia, Indonesia and the U.K. Among its brands are VMC, Sufix, Storm, Blue Fox, Luhr Jensen, Williamson, Dynamite Baits, Mora Ice, StrikeMaster, Marttiini and Peltonen. The group, which employs 2,700 people in 42 countries, had revenues of €262 million in 2018, generating net income of €6.5 million, but its results deteriorated in the first half of this year due to lower sales of third-party products.