Borenius acted as restructuring administrator and supervisor for Lindex Group Plc (formerly Stockmann Plc) in a EUR 742 million restructuring – the restructuring has now concluded

Lindex Group Plc announced on 15 August that its restructuring had concluded – approximately three years ahead of schedule. Our Senior Partner, Jyrki Tähtinen, acted as restructuring administrator and was later appointed as supervisor of the restructuring programme of Lindex Group – Northern Europe’s largest department store, which was founded in 1862, had a revenue of EUR 960.4 million in 2019, and employed 7,000 people before the COVID-19 pandemic – operating from an iconic Helsinki building with six Finnish and two Baltic stores, plus the Lindex subgroup.

This represents Finland’s largest restructuring in recent decades – rare for listed companies. Senior Partner Tähtinen negotiated an unprecedented programme covering the claims of approximately 2,000 creditors, which was approved in record time with creditor support. The creditors involved included secured creditors (banks and bond investors), over 1,000 suppliers, a commercial paper programme, and hybrid loan creditors.

The complexity of the restructuring arose firstly from the number of creditors, financing structures, the COVID-19 retail impact, and cross-border issues. Secondly, there was significant legal uncertainty regarding the interpretation of a number of sections in the Restructuring Act (i.a. regarding termination of lease and sublease agreements, and the legal standing of the administrator and subsidiaries in certain disputes). All department store leases had to be renegotiated. The iconic building of the Helsinki flagship store, as well as the Tallinn and Riga department store buildings, were successfully sold and released for over EUR 480 million (well above their debt value noted in the restructuring programme). The related disputes resulted in several landmark appellate and Supreme Court decisions.

The programme included several innovative features rarely applied in Finnish restructurings, introducing debt-to-share conversions and the first-ever option of converting restructuring programme payments into liquid secured bonds.

The exceptional debt conversion plan of the programme provided several key benefits, including sufficient investment possibilities for the company, enhanced flexibility in payment schedules, reduced payment obligations resulting from such conversion, and more equitable creditor payments, including for the hybrid loan creditors. The key advantage was that this afforded creditors the opportunity to benefit from the restructuring premium without the contentious additional distribution provisions typically found in restructuring programmes. The shares issued to the creditors have substantially appreciated in value. All in all, the success of the programme clearly proves the benefit of the proposed new Restructuring Act rules providing for debt-to-equity conversion cram-down.

More information on the restructuring programme can be found on Lindex Group’s investor website. Please read Lindex Group’s related press release here.