Private equity owned French clothing retailer Camaieu has asked lenders to amend roughly 1.2 billion euros ($1.5 billion) of loans to avoid breaching a covenant after a winter of weak consumer spending, banking sources said on Friday.

The women's clothing maker, which is owned by Cinven , met lenders in Paris on Thursday to ask for a waiver of a March covenant breach on one of its holding companies and a subsequent reset of the covenants to adjust to a new business plan.

The breach is related to levels of debt relative to core earnings, which the unit is expected to have fallen foul of at end-March after a warm winter and low consumer confidence combined to hit Camaieu, along with many retailers across the continent.

The group is still highly cash generative, with around 140 million euros of cash on balance sheet, one of the sources said. The group also told lenders that it was forecasting a slight increase in earnings by the end of March 2013.

Cinven and Camaieu declined to comment.

DEBT EXTENSION

The group also wants to extend the loans by 16 months on its revolving credit facility and term loan A to bring the maturity to September 2015 and by seven months on its term loan B to December 2015.

In return for lender consent, Cinven is proposing an interest margin uplift of 100 basis points (bps) on the loans, which brings the existing term loan B interest to 350 bps.

Roughly 23 million euros of debt partly owned by Cinven will be converted into equity to slightly reduce the burden, the sources added.

Camaieu's term loan B is bid at 75.5 percent to face value in secondary markets on Friday, down from 76.4 percent on Thursday, according to Thomson Reuters LPC data.

Holdings controlled by Cinven bought a 67 percent stake in Camaieu in May 2007 from AXA Private Equity for 1.5 billion euros. The deal was backed by a 1.275 billion euro debt package, arranged by Credit Agricole and RBS. In March 2011, the firm bought an additional 30 percent stake. ($1 = 0.7948 euros)

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