Accessorize owners will not extend more support to COVID-hit retail chain

The financial regulator has suspended the listing of Melite Finance plc’s bonds after the company failed to publish its unaudited interim financial statements for the first half of 2021.

The suspension is valid for 10 days, the Malta Financial Services Authority said.

Melite, whose subsidiary is the owner of the Accessorize retail licence for a string of stores in northern Italy, will convene a bondholders meeting within the first week of October, requesting the green light for the reduction of the 4.85% coupon on its €9.25 million bond issue.

The group was hard-hit by the COVID-19 lockdown in Italy, forcing it to shut down its stores and find new tenants for several of its stores.

The retail franchise chain suffered €4.2 million in losses last year due to the COVID closures of its Italian fashion shops for the Accessorize, Monsoon and CKU brands, and more worryingly saw its projected €6.2 million equity going down to €1.3 million.

The company operated some 26 properties in Italy, but the ravages of COVID-19 across Italy forced a severe lockdown that killed business in the country, and Melite to rescind its leases on the stores.

In August, shareholders Alf. Mizzi, Marina Milling, and the Ganado family, were requested by the Melite board to consider whether they were in a position to provide additional support to the company, over and above the €1.1 million loan to the company they provided. “The shareholders were not in a position to uphold the request tabled at the meeting,” the board said.

Shareholders have so far not proposed increasing their share capital. The company secured €449,000 from the Malta Development Bank’s Covid Guarantee Scheme to meet its interest payments for its €9.25 million bonds. The €1.1 million loan will be as part-capital contribution to the company (€630,000) that will be repayable at the option of the company after the 2028 bonds are redeemed; and €470,000 in a non-interest loan, repayable within five years.

In 2019, Melite issued a €9.25 million bond to finance a restructuring of the group, whose principal activity is the acquisition and sub-leasing of property rights for Italian retail outlets. But now the group wants bondholders to reduce the bond interest rate from 4.85% to 3.5% as from November 2021.

The company intends convening a meeting for bondholders on a proposal to reduce the coupon on the bond, which Melite says must “reflect the economic realities which the company and subsidiary Melite Properties face and will continue to face.”

The bondholders meeting will now take place by no later than 8 October, with all ancillary documentation to be communicated by 10 September, including interim management accounts for the company and subsidiary Melite Properties. A further EGM will be convened following the conclusion of the bondholders’ meeting.

Melite Finance’s stores in the cities of Bolzano, Como, Florence, Padua, Pavia, Milan, Turin and Treviso – previously sub-leased by its subsidiary Melite Properties – will be taken over a third party already operating its own brand across more than 80 stores all over Italy. It will also assume responsibility for the Accessorize franchise in Italy.

Melite also concluded agreements for the subletting of seven other stores to third-party operators unrelated to the Accessorize brand, while one store remains vacant.