Japanese buyer facilitates Charterhouse exit

UK private equity firm Charterhouse has sold Lucite International, the world’s biggest maker of acrylic products, for US$1.6bn in cash to Japanese chemicals and plastics group Mitsubishi Rayon Co.

The exit, after a hold period of nine years, was reported to be conditional upon receiving a debt-covenant waiver from the company’s creditors, according to people close to the deal.

Realising loans is first and foremost on many creditors minds at the moment, meaning that they are prepared to overlook covenant breaches in order to get repaid at face value instead of dealing with mark-to-market losses.

The Japanese group agreed to buy all the shares in Lucite from Charterhouse, which owned an 81.6% stake. Charterhouse has owned Lucite since 1999, when it bought the company from DuPont, giving it the name Lucite in 2002.

Ineos Group Holdings PLC also holds a minority stake in the Southampton-headquartered company, which Mitsubishi Rayon will acquire at a later date.

Lucite is the world’s leading producer of methyl methacrylate monomers. Its products are used to produce acrylic resins, which are used in products such as liquid crystal displays, car lights and aquarium tanks.

For UK private equity-owned assets with a natural strategic buyer, cash-rich Japanese corporates could increasingly be the parties offering an exit route as a sharp appreciation in the yen has made targets considerably cheaper.

Sources said that the transaction, after an approach by Mitsubishi Rayon, took two to three months to put together. Last week, the Japanese currency bought about 30% more in sterling terms than it did on September 1.

Data show that Japanese companies have become more acquisitive overseas this year due to the surge in the yen. According to Thomson Reuters, acquisitions abroad by Japanese companies total US$61bn so far this year, smashing 2006’s full-year record of US$44.2bn.

Mitsubishi Rayon said Bank of Tokyo-Mitsubishi UFJ will provide a loan to finance the deal and it will also seek co-investment partners in due course.

The deal is expected to complete in January 2009, subject to regulatory approval.