Foto The Lycra Company
“The transaction will reduce debt by $1.2 billion and provide more than $75 million in new capital to support the business during the restructuring,” said the company’s chief financial officer, Dean Williams. He added that employees, customers and suppliers will not be affected.
This is the second time in four years that Lycra is under the control of creditors, Bloomberg writes. In 2022, they gained control after the default of the previous owner, China’s Ruyi Textile and Fashion International Group Limited. The company’s history began in 1958, when a group of DuPont scientists created the original spandex filament.
Recent years have been tough for Lycra. The company has faced supply disruptions, a drop in consumer demand during the pandemic, high inflation and increased competition from low-cost producers. Trade tariff uncertainty and debt service costs were also negatively impacted.
By the end of last year, utilization at its eight manufacturing sites had fallen to about 60%, and EBITDA was expected to fall to $44 million from $132 million in 2024. Before the bankruptcy, the debt structure included $214 million of super senior term loans, $520 million of Eurobonds and $780 million of dollar bonds.
Attempts to stabilize the finances through the sale of the business to another Chinese company in early 2025 were unsuccessful. When the deal fell through, lenders began acquiring the company as part of a previously agreed Plan B. The financial situation worsened and the company eventually opted for a final restructuring deal, announced Tuesday.
Lycra hopes the new plan will allow the company to emerge from the crisis with less debt and stable capital for future growth.
