The Finnish department store company Stockmann, which has been going through difficult times since last spring due to the Coronavirus crisis, unveiled its corporate restructuring plan on Monday.
With this strategy, which is based on the sale of real estate in Helsinki, Tallinn (Estonia) and Riga (Latvia), the company founded in 1862 expects to survive the current crisis and also redirect its business and adapt to the changing habits of the consumers.
According to a press release by the Stockmann Group, the administrator of the company's restructuring proceedings, Attorney Jyrki Tähtinen, filed a proposal for the restructuring programme with the Helsinki District Court on 14 December.
In accordance with the draft restructuring programme the company has 433.5 million euros in secured restructuring debt, 195.7 million in unsecured restructuring debt and 108.1 million in hybrid bond debt, totaling 736.9 million euros.
Helsinki, Tallinn, Riga
The plan is based on the continuation of Stockmann’s operations, but it includes the sale and lease-back of the department store properties located in Helsinki, Tallinn and Riga.
Lindex’s operations will continue under the ownership of the Stockmann Group, and its cash flows should contribute to cover payment obligations disclosed in the restructuring programme.
The company has negotiated new lease agreements for its shops at Jumbo shopping centre in Vantaa, Turku department store, Tampere department store, Tapiola department store in Espoo and office space in Pitäjänmäki, Helsinki. The negotiations concerning its shop at ITIS shopping centre (east Helsinki) are continuing.
Sell premises, save business
In short, Stockmann wants to keep its department stores and shops open, but the company needs to sell the property and become a tenant in order to save the business. At the same time, the company will try to improve online sales and the customer experience.
"Both the company and the administrator are confident that the measures described in the restructuring programme can be used to restore the company’s business and the prerequisites for a profitable continuation of business exist," the release says.
The proposed restructuring programme would last for 8 years in which the company also aims to respond "the changes in the operating environment and consumer behaviour" by investing in customer relationships and loyalty, enhancing the customer experience and focus on profitable business operations.
The company says it does not plan to implement staff reductions as part of the restructuring programme.
The programme is supported by the company’s largest creditors, the committee of creditors and the largest shareholders (representing 45.3% of shares and 62.6% of votes) as well as the company’s Board of Directors and management.