Candover and Cinven consider Springer stake sale

LONDON, March 27 (Reuters) – Springer Science and Business Media’s private equity owners are considering selling a stake in the publisher for about €400m to meet debt repayments, several sources said on Friday.

Candover and Cinven are mulling a sale of a 49% stake as one of several options to tackle high looming debt repayments the German academic publisher is unable to meet, a senior media banker said.

“Springer are exploring quite a lot of different things, they are looking at everything,” another source said.

A tie-up with UK publishing and exhibitions group Informa or asset sales are other options.

The prospective sale is still in early stages, but could attract interest from private equity and trade buyers, two banking sources familiar with the matter said.

Springer approached Informa in 2006, but talks broke down after a few weeks. Analysts have said a tie-up would make sense.

“Longer-term we think it would make sense for Informa to merge with Springer,” said UBS analyst Polo Tang in note.

“There would be significant synergies on the academic side, although we believe nothing will happen in the near-term given Informa’s debt position.

Informa declined to comment.

UBS and Goldman Sachs have been appointed to manage the process, the sources said. UBS declined to comment. Goldman could not be reached immediately for comment.

Classic refinancing

Springer is facing a crunch on its existing €3.08bn leveraged loan, which it is unable to refinance as markets have frozen up, the senior media banker said.

“This is a classic refinancing problem,” he said.

The sale of a stake could give Springer the financial firepower to strike a deal with banks that would allow it to keep its debt financing in place, the banker added.

Springer could offer to pay down some of its debt in return for banks agreeing to allow a new equity investor to step in.

The sale may not proceed if a deal cannot be reached with banks, as any new equity investor would require assurances that a bank deal was possible, the banker added.

Springer is performing well and the company was taking a proactive approach to its debt with more than two years to go before the repayment crunch, bankers said.

The company’s leverage was described as ‘not too awful’ at 6x to 7x earnings before interest, tax, depreciation and amortisation (EBITDA), bankers said.

Springer was formed in 2003 when Candover and Cinven merged BertelsmannSpringer with Kluwer Academic Publishing, which was financed with a €810m leveraged loan arranged by Barclays Bank, according to Thomson Reuters LPC data.

The two private equity firms took advantage of the hot debt market to recapitalise the company’s debt three times in 2004, 2006 and 2007, also via Barclays, the data show.

The private equity firms used the debt to pay themselves large dividends, which more than trebled Springer’s debt load to €3.08bn.

(By Tessa Walsh and Victoria Howley. Additional reporting by Simon Meads in London and Nicola Leske in Frankfurt; Editing by Andrew Macdonald)