Will the Fung family come back for a Trinity deal?
Crisis means opportunity for the Fung family, one of the most well-known trading houses since the last century.
This year the family led by Victor Fung and William Fung has been active. After privatizing their flagship Li & Fung in a US$930 million deal in the first half, they sold convenience store chain Circle K last month for US$360 million.
Now the focus is on whether the Fung family might come back to save its ailing Trinity business after cashing out US$280 million three years ago.
The Fung family sold 51 per cent of Trinity, which runs Cerruti 1881, Gieves & Hawkes, Kent & Curwen and D’urban, to Ruyi Group in 2017 after running a few years’ losses.
In a fate reminiscent of HNA Group, the Shandong-based aggressive company, once hailed as the LVMH of China, went into financial trouble after gobbling up brands such as Sandro and Aquascutum over the years, only to find itself being stuck now with a situation where most people in the planet do not need to dress up for business because of social distancing.
This week, Ruyi failed to redeem a one billion yuan bond issue as it came to maturity. Standard Chartered immediately filed a petition to liquidate Trinity.
According to Trinity’s latest announcement, Ruyi has been seeking for an amicable settlement, noting that the company has worked hard to pay back HK$1 billion debt previously to bring down the loan balance to HK$568 million as of end of December, 2019.
Ruyi said it would seek a strategic investor and new fundraising channels after securing support from an absolute majority to roll over the debt and spread them over the next three years, according to reports.
That is why some investors might think Fung family could come back as the white knight.
Trinity ended yesterday with a share price of HK 8.3 cents, down 93 per cent since Ruyi’s takeover.
Earlier this month, fashion retailer I.T. owner Sham Kar-wai teamed up with private equity CVC to buy out minority shareholders for HK$1.3 billion, taking advantage of the poor market to take home some pricey assets such as A Bathing Ape.
It makes sense for the Fung family, known for their well-timed action to buy low and sell high, to look again at Trinity, but it would be up to Ruyi to decide if it wants to sell back at a depressed price.
Sales at Trinity fell over 60 per cent in the first half this year as it reported a loss of HK$161 million, against a profit of HK$76 million a year ago.
Watch this space.
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