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An ad hoc group of creditors representing more than 75% of Oriflame’s bonds have signed a co-operation agreement in an effort to combat a recently announced liability management exercise, according to 9fin sources.
The agreement, which became effective yesterday, 4 September, binds the group to collective action as refinancing negotiations with the Swedish beauty products direct seller start to heat up after months of silence.
Oriflame designated four subsidiaries as unrestricted late last week and said it was in “active discussion to raise financing against the assets”. The subsidiaries include Cetes Cosmetics Poland, a manufacturing entity in Poland, Cetes Cosmetics AG, a manufacturing entity in Switzerland, Oriflame Cosmetics AG, the group’s Swiss business, and Oriflame Software S.R.O, the IT entity behind the group’s e-commerce platforms.
The quality of regulatory filings for each entity varies. Oriflame Software’s latest accounts, ending 31 December 2022, show that the group had around €9.5m of net total assets and posted ~€203,000 in net turnover. Check out the original copy of the accounts on 9fin, and a machine-translated version here.
The ad hoc group of noteholders, including Blantyre Capital, are working with Moelis and Sullivan & Cromwell. While Oriflame has appointed advisors from Rothschild and Ropes & Gray.
Oriflame faces maturities on its €250m FRNs and $550m 5.125% SSNs in 2026, which are both currently trading at prices below 25, according to 9fin data. The direct seller also drew €15.5m from its €100m RCF due November 2025 in Q2 24 (period ending 30 June).
The revolver has a 0.8x super senior net leverage springing covenant, which is tested (on a quarterly basis) if amounts drawn under the facility minus cash held exceeds 35%. If breached, the covenant triggers a drawstop on further utilisations of the facility but does not constitute an event of default.
The group’s Q2 results showed that Oriflame’s sales and membership remain on a downward trajectory. Sales were down 19% year-on-year to €148.2m, while the average number of members was 1.4 million, down 200,000 from the previous quarter; adjusted EBITDA was down by 50% to €6m for Q2 and came to €22.9m on an LTM basis.
Oriflame ended the quarter with €78.3m of cash on the balance sheet, and net secured leverage of 30.6x.
Oriflame has not responded to a request for comment.
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