Banks join in talks on Pepe's refinancing

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The Independent Online
PEPE, the recession-battered clothing company, said yesterday its bankers had been included in talks about restructuring, writes John Murray.

The company, which designs and distributes jeans and casual wear, has been in discussions about new equity financing with its principal shareholders since the end of August.

It is understood the bankers have been brought in because any deal to refinance the group will need their co-operation.

Net debt was pounds 19.5m last September, at the end of the last period for which Pepe reported. The company has twice delayed its results for the year to March, originally to have been published in July.

The results are expected to include heavy exceptional and extraordinary costs associated with the restructuring and rationalisation of the group. These will be on such a scale that they have a bearing on the discussions with shareholders and bankers.

It is understood that the Chou family of Hong Kong, who acquired a 29 per cent stake in March through Novel Enterprises, are keen to stay with Pepe and develop the group.

But they have to agree the terms of any refinancing with other large shareholders, including the Shah brothers, who founded the business and retain a 32 per cent stake.

The new chairman, Silas Chou, has been reshaping the business and significant rationalisation has already taken place.

The company said that trading conditions remained difficult. Pepe shares have plummeted to 11p from a high of 106p this year.

Pepe expanded rapidly in the 1980s until forced to retrench by deteriorating markets worldwide.