HONG KONG, China – Fashion conglomerate Shandong Ruyi, best known for its ambition to be the LVMH of China, has pushed aside a sale of textile producer Lycra proposed by Lycra’s creditors and wants to float the company publicly instead, two people said with direct knowledge to Reuters.
Debt-laden Shandong Ruyi Technology Group bought control of The Lycra Company from U.S. conglomerate Koch Industries for $ 2.6 billion in 2019, borrowing approximately $ 1 billion for the deal.
Lycra’s weakening financial performance prompted some of its creditors to hire restructuring firm Alvarez and Marsal as advisers, fearing that Lycra would default, the two sources said.
A&M had surveyed potential buyers for Lycrasaid, one of the people, who refused to be identified due to confidentiality restrictions in the past two months.
But no deal came about when Ruyi was against the idea and preferred to hold the company while looking for other life-saving appliances, people said.
One source said Ruyi believed that Lycra would be better valued through an initial public offering than through a trade sale. Last year, Ruyi proposed to place the company in China’s new technology-oriented STAR market.
The sources did not want to be mentioned because the information was not public. Ruyi and A&M declined to comment.
Moody’s lowered Lycra’s debt ratings by two points in April to Caa2 with a stable outlook, after dropping by two points in December.
The rating agency cited the weak global economic outlook exacerbated by the corona virus pandemic, but said Lycra’s high leverage, as well as Shandong Ruyi’s indebtedness, were also factors.
Ruyi has been rated as Caa3 by Moody’s. In a note this week, the agency estimated Ruyi’s debt-to-EBITDA ratio – a measure of leverage that compares loans to corporate earnings – at 25-30 in the next two years, from 10 in 2019.
Ruyi owns 53.4 percent of Lycra, Koch Industries 22.2 percent and Itochu Group subsidiary CFC 15.5 percent. Minority shareholders own the remaining 8.9 percent.
The woes of Ruyi and Lycra were reflected in sharp declines in the bonds sold to pay for the purchase of Lycra. The mid-price on the Lycra bond fell 7.5 percent in May 2025 from about 80 cents at the end of 2019 to about 55 cents in April, Refinitiv said. It was listed on Thursday at 69,375 cents.
Ruyi, whose roots are in the textile industry, started a bargain in 2015, including French fashion house SMCP, Aquascutum and Savile Row, tailor Gieves & Hawkes.
In 2018, Ruyi chairman Qiu Yafu told Reuters that LVMH was the company’s role model, adding, “We’re still a long way off, but that’s our vision.”
But Ruyi struggles with the debt incurred to finance the deals. The company narrowly met a December deadline to repay $ 345 million in offshore bonds, while creditors of 1 billion yuan ($ 143.94 million) in onshore bonds agreed to make a repayment due March to December extend.
In May, Japanese clothing company Renown, which Ruyi owns, filed for bankruptcy.
By Kane Wu and Scott Murdoch with additional reporting by Andrew Galbraith; editorial: Jennifer Hughes and Kim Coghill