Freshfields, Hengeler Advise on €3B Adidas Government-Backed Syndicated Loan

Freshfields Bruckhaus Deringer and Hengeler Mueller advised on a €3 billion ($3.3 billion) government-backed loan to German sporting goods retailer Adidas, as the company struggles with the economic impact on its business from the coronavirus crisis in China and globally.

Freshfields advised the banking consortium that includes UniCredit, Bank of America, Citibank, Deutsche Bank, HSBC, Mizuho Bank and Standard Chartered Bank. Hengeler advised Adidas, according to sources close to the deal.

The loan also comprises a loan commitment of €2.4 billion from KfW, a state-owned development bank that launched a loan program to provide several hundred billion euros to shore up companies’ liquidity.

“Today, the company received the approval of the German government for the participation of KfW, Germany’s state-owned development bank, in a syndicated revolving loan facility amounting to 3.0 billion euros,” Adidas said in a statement.

Retailers have been hit hard by lockdowns and restrictions on movement, and Adidas has been especially hurt by the postponement of the Olympic games.

But the company came under fire in March when it announced plans to defer rental payments for its shops in Germany. Adidas subsequently reversed its decision amid a public backlash. Most retailers in Europe’s largest economy are closed until least April 20, with a very light lifting of restrictions after that.

Adidas saw 2019 full-year revenue of €29 billion.

The syndicated revolving loan facility amounts to €3 billion at customary market conditions, Adidas said. The loan is tied to a number of restrictions, including the suspension of dividend payments. In addition, the company’s executive board halted its share buyback program and said it would forgo its short- and long-term bonus for the year 2020.

In addition to the significant revenue decline the company has seen in China since the end of January, as well as in Japan and South Korea from late February onward, Adidas has seen its revenue decline in most other parts of the world since mid-March.

“The current situation poses a serious challenge even for healthy companies. We thank the German government for its fast and comprehensive course of action in response to this unprecedented global crisis,” Kasper Rorsted, the company’s chief executive officer, said in a statement.

Freshfields partner Frank Laudenklos advised the banking consortium. Hengeler Mueller partner Johannes Tieves advised Adidas.