The BC Partners-backed Brenntag is pushing ahead with its IPO following an amendment to its €2.5bn loan.
Brenntag, a German chemical distributor, is looking for changes to its debt package which will see increased margins in return for changes that include allowing equity proceeds to repay mezzanine debt.
If approved, the senior and junior margins will rise by 175bp, with lenders earning a 75bp fee, and early birds responding by December 4 gaining an extra 25bp. The final deadline is December 9.
London-headquartered buyout firm BC Partners acquired Brenntag in 2006 in a secondary deal with Bain Capital which was the second largest German LBO to date, at a reported €3bn, backed by €2.5bn of debt.
Reuters reported in September that BC was planning an equity issue of up to €1.5bn, which would cut the private equity firm’s stake to less than 50%.
The listing will reduce Brenntag’s leverage to less than three times EBITDA. Should leverage fall below 2.75 then the group will be able to ask lenders to repay second-lien debt. From an initial total debt leverage ratio of 6.4, the group is now leveraged at around 3.6.
BC is also looking to float UK estate agency Foxtons, which it acquired in May 2007 for £390m. Foxtons has had a hard time of it during the recession, and breached its banking covenants in December 2008, forcing the buyout house to admit it had made a mistake in buying the company.
At around the same time BC lost its chairman, Jens Reidel, who had been with the firm since 1992. He was replaced by co-chairs Francesco Loredan, who is based in Geneva, and New York-based Raymond Svider.
The firm is also expected to be looking for a listing of Medica, the Franco-Italian care home operator it acquired in 2006 for €750m from Bridgepoint. Like Brenntag, Medica have also approached lenders and in return for approving an IPO in Q1 of 2010, lenders earned a 50bp waiver fee, with early birds receiving a further 25bp.
BC has already exited one major investment, that of Unitymedia, the second largest cable operator in Germany, which was sold to Liberty Global for US$5.2bn. BC acquired the business alongside Apollo, which has also exited, in 2003 in a US$2.2bn deal.