The United States subsidiary and most valuable asset of bankrupt Moulin Global Eyecare Holdings could be in trouble. In a development that will hound Moulin's creditors, Eye Care Centers of America yesterday revealed its own financial health was precarious.
Eye Care, the third-largest eyewear retailer in the US, revealed in a bond prospectus that any sale of Moulin's stake would oblige it to immediately repay JP Morgan Chase Bank US$165 million in senior debt and an additional US$152 million in outstanding bonds.
On July 2, Eye Care had US$21.4 million cash and long-term debt of US$316.8 million, its highest gearing in four years.
'We could be forced into bankruptcy or liquidation, which could result in you losing your investment in the notes,' the firm warned investors, from whom it was hoping to raise a further US$152 million through 10-year notes.
According to an insider, Moulin's creditors are keen to sell the company's 56 per cent stake in Eye Care as soon as possible. More than 20 creditor banks, led by HSBC, are chasing Moulin for more than $2 billion in unpaid debt.
US venture capital firm Golden Gate Capital, which owns 43 per cent of Eye Care, opposes any change in the status quo.
Golden Gate's bargaining position is strengthened by Moulin's obligation to buy back the venture capital firm's shares in Eye Care at a premium by February 2009. Any party acquiring Moulin's shares in Eye Care will have to honour that agreement.