Lpc loans in retailer jack wolfskin plummet in secondary market

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Nov 3 Loans in German outdoor brand Jack Wolfskin have plummeted on Europe's secondary loan market after lenders were told that next year's earnings are likely to be half of what was expected, banking sources said. The company held a call with lenders on Monday. Since then, its euro term loan B has fallen to 54.7% of face value on Thursday from 75.4% at the beginning of the week. The borrower's euro second-lien term loan was quoted at 17.5% of face value on Thursday, down from 67% on Monday, according to Thomson Reuters LPC data. The senior TLB has been quoted as low as the 40s, according to several loan traders. At these levels, lenders are likely to take severe losses, especially on the junior debt, sources said.

Private equity firm Blackstone agreed to buy Jack Wolfskin in 2011 from Quadriga Capital and Barclays Private Equity, backed with 485m of debt. The debt in the business now totals 365m, sources said.

At the call with investors -- to give an annual update -- it was revealed that earnings are likely to come in at around 30m, as opposed to around 60m expected. The company has been struggling with tough conditions in the retailer sector. It has also faced difficulties in China since it took direct control of the distribution of its products to around 700 Jack Wolfskin stores in the country in 2015, sources said.

With debt trading at deeply distressed levels, the company is expected to need a covenant waiver, the sources said. It could also look to restructure its loans and reduce them, in a bid to make its debt more manageable. Blackstone declined to comment.