Pierre & Vacances restructuring: Parc life

In September Pierre & Vacances-Center Parcs Group announced the complete details of its capital and financial restructuring transactions, which included an equity contribution of approximately €200 million, the conversion of €555 million of debt into equity and a new financing package worth €300 million.

At the start of December 2022, the first annual results post restructuring were published. They saw the group (home to the Pierre & Vacances, Center Parcs, Maeva and Aparthotels Adagio brands) post revenue of €325 million. 

Such growth would have been unimaginable two years ago, and arrived not a moment too soon to restore confidence in the viability of a business that had been on life support since the pandemic, and was forced to take the exceptional measure of going cap in hand to the treasury, securing a state guaranteed loan of €240 million, which, nevertheless, was not enough to claw back lost revenue of €425 for 2020.

Ski lifts under lock and key
After the total write-off that was 2020, there was another blow during the winter holiday season of 2021 when the French government took the decision to close the ski lifts, scuppering hopes for the January to April ski season and dealing a severe economic blow to an industry which represents €12 billion in annual turnover for France.

Something had to give, and in February of that year PVCP went seeking a white knight. In the front line of those riding to the rescue were a pair of British investment funds, Alcentra and Fidera. New money in place, the consortium then turned to real-estate fund Atream whose founder, Paul Savary, had the most credible vision for turning around the fortunes of the venerable holiday resort operator.

The decision to close the ski lifts in 2021 scupperered hopes for the January to April ski season and dealt a severe economic blow to PVCP

“The specifics of this restructuring plan is that it was carried out in two steps, with a high level of responsiveness on the part of lenders, who were willing to give PVCP a fresh injection of cash on each occasion,” remarked Jean François Cizain, a partner at financial advisory firm Messier & Associés, who provided advice to the new investors.

Crucially, at the end of December 2021, an agreement was struck with the group of French banks that had traditionally provided financial backing to PVCP, paving the way for the rescue plan to be implemented, something which took place in September 2022.

State guaranteed loan to equity swap?
Details of the restructuring plan for a group with 12,000 staff and eight million clients were announced in September. They confirmed that the consortium of British funds composed of Alcentra (with a 25.4% stake) and Fidera (24.2), alongside Atream (8.8%) and the French state, were now calling the shots.

“The government initially refused outright our overtures requesting it provide a state guaranteed loan to PVCP, but relented when they realized there was no alternative,” remarked Jean François Cizain, who went on to stress that the state had no desire to manage the affairs of the group and, with the group’s debt now converted to capital, the government’s interests in the deal would be handled by a trustee, Pristine. In this way the, the government could avoid being considered a true shareholder, yet also benefit from its investment, if and when PVCP’s fortunes took a turn for the better.  

End of an era
Gérard Brémond, founder of the Pierre & Vacances-Center Parcs Group, said: “In 55 years, since the creation of the resort of Avoriaz, the Pierre & Vacances-Center Parcs Group has gradually become the European leader in local tourism. I congratulate the 12,000 employees of the Group and its CEO Franck Gervais, for their commitment and professionalism,” said Brémond, who went on to endorse his successor, Georges Sampeur, as the man to “lead the group into a bright future.”

At 84 years of age Brémond is no longer in charge, but has stayed on in an advisory capacity. “The grace with which Gérard has accepted the situation has been quite remarkable. An amical departure from a firm ready to make a fresh start.

The all-new board of directors is now presided over by ex-B&B Hotels boss George Sampeur, while Franck Gervais, a former executive at French rail operator SNCF takes over as CEO.

“This strong and radical strategic shift currently underway should enable the group to improve its performance and return to sustainable profitability, in addition to accelerate the deployment of our strategic plan oriented towards a new reinvented local tourism,” stated Gervais.

In the pair’s in-tray, breathing new life into the business of the group, starting with Phase II of the development of its Village Nature Paris resort.