Blackstone-backed retailer faces testing negotiations with lenders after annual earnings are slashed

Oliver Gill
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Blackstone bought Jack Wolfskin in 2011 (Source: Getty)

Outdoor clothing retailer Jack Wolfskin has gone cap in hand to its lenders after revealing annual earnings have halved and forecast earnings will be less than previously expected.

The German-based company was saddled with €485m (£418m) of debt facilities, when current owners Blackstone, a private equity firm, bought it in 2011. The debt in the business now totals €365m.

The company has told its lenders that annual earnings would be approximately €30m compared with the €60m previously forecast, sources close to the banks told Reuters.

Read more: Blackstone Group profits up as it tops third quarter results

Jack Wolfskin's debt is spread across several tranches of lending. Some of the junior debt has fallen to as low as 17.5 per cent of its face value, meaning holders can expect to receive just 17.5 cents for every €1 held.

Blackstone put the original debt facilities in place when it bought Jack Wolfskin in 2011 from Quadriga Capital and Barclays Private Equity.

It agreed with lenders to amend its facilities last year but sources close to the company said that it informed lenders on Wednesday that it expected to be in breach of its latest banking covenants and require a waiver while it cuts new financial forecasts.

Read more: Blackstone acquire TeamHealth in $6.1bn deal

According to reports on Debtwire, on Wednesday this week it held a further call with lenders to discuss next steps and Blackstone has appointed lawyers from London-based Freshfields and Stuttgart-based Gleiss Lutz.

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