It Is Reported That Shandong Ruyi Refuses To Sell Lycra At A Low Price, But Hopes To List It

Shandong Ruyi, a fashion group once known for its ambition to become a Chinese version of LVMH, ignored a proposal by Lycra creditors to sell the textile maker and instead sought the possibility of making the business public, two people with direct knowledge of the situation told Reuters.

In 2019, Shandong Ruyi technology group, which is heavily in debt, bought the controlling right of Lycra from Koch industrial group (Koch) for us $2.6 billion, and the transaction borrowed about US $1 billion.

Leica's weak financial performance prompted some creditors to hire Alvarez & Marsal, a restructuring company, as advisers because of concerns about possible default, two sources said.

In the past two months, a & M has approached potential buyers who are interested in it and declined to be named for reasons of confidentiality, one of the people said.

However, the person familiar with the matter said that as Ruyi opposed the idea, the group was more willing to retain Lycra when the company was looking for other rescue methods, so no agreement was reached.

Another source said Ruyi believed that the valuation of Lycra would be better by listing rather than by trading. Last year, the group was listed on the board. The source declined to give his name because the information was not public.

Ruyi group and a & M declined to comment.

Moody's downgraded Lycra's debt rating by two notches to caa2 in April, with a stable outlook after the company had downgraded it two notches in December last year.

The rating agency said the outbreak exacerbated the weakness of the global economic outlook, but Laika's high leverage and Shandong Ruyi's debt were also reasons.

Ruyi was rated caa3 by Moody's. In a report this week, the agency estimated that Ruyi's debt to EBIT ratio, a measure of leverage used to compare borrowing to operating profit, will rise from 10 times in 2019 to 25 to 30 times in the next two years.

Ruyi group holds 53.4% shares of Lycra, Koch industrial group holds 22.2% and Itochu Group subsidiary CFC holds 15.5%. Minority shareholders hold the remaining 8.9% of the shares.

The plight of Ruyi and Leica has been reflected in the sharp fall in the price of bonds issued by the former to buy the latter. According to refinitiv, the median price of Lycra's 7.5% bonds fell from 80 cents at the end of 2019 to 55 cents in April in May 2025. Thursday's offer was 69.375 cents.

Become LVMH's wild hope

Ruyi, whose roots are in the textile industry, has been buying heavily since 2015, including French fashion group SMCP, aquascutum and the men's wear brand gieves & Hawkes of Savile row.

In 2018, Ruyi Group Chairman Qiu Yafu told Reuters LVMH was the company's model, adding: "we are far from it, but this is our vision."

But Ruyi has been struggling to cope with the debt it carries to finance these deals. The company narrowly met the December deadline to repay $345 million in offshore bonds, while a billion yuan of onshore paper creditors have agreed to extend the March maturity to December.

In May this year, renown, a Japanese clothing group owned by Ruyi, filed for bankruptcy.