Hema acquired by its largest creditors; €450M debt swapped for shares

Hema reached an agreement with a group of creditors on the company's debts, with the bond holders taking over ownership of the company to potentially sell it to another bidder at a later date. Some 450 million euros of the retail chain's debt will be converted into shares and the group of creditors will thus become the full owner of the company, Hema announced on Monday.

If this deal is approved by relevant authorities, Hema's debt load will then fall from 750 million euros to 300 million euros. Its cash interest payments will decrease from about 50 million euros per year, to roughly 30 million euros annually. The group of creditors also committed 40 million euros of incremental financing to create a liquidity buffer for Hema.

The new ownership agreed with outgoing owner, Marcel Boekhoorn, that debt levels at the company would likely destroy the retail chain. "As is already known, HEMA's current debt structure is unsustainable in the long term. The impact of COVID-19 has further increased the need to resolve this in the short term," Hema said in a statement announcing the ownership change.

According to the company, this deal will secure Hema's future and allow the company to navigate the challenging market environment and execute its business strategy. The new ownership said Hema's strategy will include more focus on e-commerce, better strategic partnerships, and the continued expansion into new markets. The Dutch retailer already operates in 11 countries, with 19 thousand employees. Over half are based in the Netherlands.

"Today's agreement represents the next step in our journey to bring back Hema to financial stability and is therefore a critical step to secure the future of Hema," Hema CEO Tjeerd Jegen said. Hema's level of indebtedness was unsustainable and severely limited the company's options to execute plans for the future, he said.

"The announcement today constitutes a truly important milestone for the business, our colleagues, our suppliers, our customers and all our stakeholders. We can now put full focus on our future, with a solid balance sheet and a profitable operation, while we continue to provide fantastic products for our customers, building brand equity and grasping new market opportunities," Jegen said.