Investment company Parcom and entrepreneurial family Van Eerd, owner of supermarket chain Jumbo, have been able to borrow enough money from banks to take over department store chain HEMA. This means that nothing seems to stand in the way of the definitive takeover.
The due diligence on HEMA’s financial management has also been completed to the satisfaction of the two acquisition parties, the investment companies Parcom and Mississippi Ventures, the investment company of the Van Eerd family, report in a joint press release.
They say the acquisition will be completed in February of 2021.
Supervisor approval required
That still depends on the approval of competition authorities, who have to judge whether the deal is not disruptive to the market.
In addition, the HEMA Works Council is asked for advice on the deal.
Getting enough money together to make the takeover was the biggest stumbling block, according to Frits van Eerd’s thank you to three major Dutch banks.
“We particularly appreciate the support of the three major Dutch banks ABN Amro, ING and Rabobank in this transaction,” said Jumbo’s CEO in the press release. The banks contributed to raising 400 million euros for the acquisition.
Agreements have also been made about a new revolving loan of 80 million euros, which HEMA can use.
Group of creditors
HEMA fell into the hands of a group of creditors in the summer when the company was unable to pay off the interest on a debt to them. The then owner Marcel Boekhoorn was therefore forced to part with the company he bought in 2018.
In order to be able to sell HEMA, the creditors have forgiven part of the money that they still had credit. This has reduced the debt burden of the department store chain from 750 million to approximately 450 million.
Borrow cheaper
The banks are now taking over approximately 400 million euros in loans from the latter amount. Those loans are a lot cheaper for HEMA. Compared to the situation at the beginning of this year, the company has only lost 10 million euros in interest instead of the 50 million it had to pay first.
The new owners use 38 million euros from HEMA itself to settle the last remaining outstanding debts.
Closure of shops
How much the group of creditors ultimately get for their shares depends on the company’s performance through January. The forced closure of the stores in the Netherlands due to the lockdown can still reduce that amount.
In the past quarter, the company’s sales already fell 2.2 percent compared to the same quarter last year. The company was particularly affected in the Netherlands. Because there are fewer people in the shopping streets due to corona-restricting measures, turnover in stores fell by 5.6 percent.
Expensive lawyers
Gross profit decreased from EUR 60.2 million in the third quarter of 2019 to EUR 33.1 million in the same quarter this year.
This 45 percent decrease was largely due to legal and advisory costs. In recent months, HEMA had spent 21.7 million euros on this. Without this cost item, gross profit would have decreased by about 12 percent.
The deal is good news for HEMA itself and the company’s thousands of employees. Because the company has less debt, there is also room to invest again, says CEO Tjeerd Jegen. He calls it an important milestone.
Focus on the future
“With this agreement, we can once again focus on our future and focus on delivering great products to our customers,” said Jegen.
9,500 people work at its own stores, the bakeries and at the head office. Another 7,000 work at the Dutch franchise branches. The takeover does not change the agreements made with them on terms of employment.
