In a bid to stop the clothing chain from breaching its covenant agreement, UK mid-market private equity firm Bridgepoint is to inject an ‘equity cure’ into fashion chain Fat Face.
Fat Face has more than 140 stores across the UK and was founded by Jules Leaver and Tim Slade in 1988. They sold it to private equity group Advent International in 2005 for almost £100m. Two years later Bridgepoint bought the company for £360m.
Last year, Bridgepoint bought back some of the loans that were held against the group in an effort to reduce the burden of its borrowings. In September it was reported that the company’s debt stood at £168.2m after Bridgepoint and Fat Face’s management bought £21.8m of debt for £12.2m.
However, in December company results sent to the company’s lenders indicated the firm had come perilously close to breaching the agreements of its loan agreement. Fat Face is now reported to be looking at using its £4.6m equity cure fund designed to placate lenders when covenants are close to being breached.
Although, it has pressures on its capital structure, Fat Face showed resilience over the Christmas period. In December, it beat sales forecasts by 5.6%.