Key Takeaways
- Sector: Manufacturing.
- Geography: Germany.
Analysis
Partners Group is in restructuring talks that could lead to the transfer of control of German toy manufacturer Schleich to its creditors, including Investec and HIG Capital. The group is proposing a €5 million injection to address near-term liquidity needs, with Blackstone also involved as a loan manager for other institutional investors.
If the plan proceeds, creditors would temporarily assume control while launching a structured sale process. Restructuring advisor Ankura and audit firm Ernst & Young have been retained to evaluate viability and guide the process.
Schleich has €175 million in first-lien loans and a €40 million revolving credit facility maturing in 2026. Partners Group used this debt for its 2019 buyout from Ardian. The firm has faced significant revenue pressure, including a 15% decline in 2023 to €234 million, amid global demand softness and U.S. trade friction affecting China-based manufacturing.
The situation reflects broader turbulence in the consumer and toy sectors, which have seen multiple restructurings and distressed transactions in recent years.
In 2023, Rubie’s Costume Company, one of the world’s largest costume makers, underwent a debt restructuring that involved a lender-led asset sale following pandemic-driven losses and supply chain disruptions. Similarly, Jakks Pacific, a major U.S. toy producer, narrowly avoided bankruptcy in 2020 after renegotiating with bondholders to extend maturities and avoid covenant breaches.
Party City, the U.S.-based retail chain and toy supplier, filed for Chapter 11 in early 2023 due to overleveraging and pandemic headwinds, ultimately emerging through a creditor-supported restructuring. Its suppliers and licensing agreements, including those with toy makers, were significantly impacted during the process.
In Europe, Playmobil and Märklin have faced repeated ownership changes and financial stress due to increased production costs, inflation, and shifting consumer habits, although recent stabilization efforts have shown progress in preserving their legacy brands.
Private equity-owned consumer companies with international supply chains, such as Schleich, continue to be vulnerable in the current high-rate, high-cost environment. These restructurings reflect mounting pressure across the industry, particularly for sponsors and lenders facing weakened exits and delayed growth trajectories.
Spokespeople for Partners Group, Schleich, Investec, HIG Capital, Blackstone, Ankura, and EY declined to comment on the ongoing discussions.