Oaktree gets Countrywide

A consortium led by distressed debt investor Oaktree Capital has moved closer to finalising a debt-for-equity takeover of UK estate agent Countrywide, with the announcement that the consortium has the backing of noteholders representing 78% of the total outstanding senior secured notes and about 83% of the total outstanding senior notes.

The noteholder group required the backing of 75% of senior note holders in order to initiate a court-sanctioned scheme of arrangement to execute the proposed debt-for-equity swap. Senior floating rate notes traded at 34/36 last week, as the final numbers backing the deal lined up.

A consortium comprising incumbent-sponsor Apollo alongside new investors Oaktree, Alchemy Special Opportunities and hedge fund Polygon are behind the bid and have proposed a debt-for-equity swap that would leave them with 60% of a hugely deleveraged business.

If successful, the move will be the first time distressed investors have taken control of a European company through the acquisition of discounted debt in the present downturn.

The proposed debt-for-equity deal involves a £75m cash injection that sees Countrywide’s debt cut by 75%, from £740m to £175m. Senior bondholders are being offered a 35% equity stake to back the deal, plus all of the new debt. Junior bondholders are being offered 5% of equity while Apollo and new investors would take the remaining stake.

The company now expects the scheme to be filed with the relevant courts in March.

Swedish bathroom-products maker Sanitec has agreed an extension to its standstill agreement with senior lenders. The standstill now runs until April 30. The company has been in talks with lenders since December. It breached loan covenants at the end of 2008 but has so far held off its mainly Nordic lenders from enforcing their security, despite failing to agree a restructuring.

EQT has proposed injecting new capital into the business in a deal that would see second-lien lenders wiped out and senior debt reduced from €850m to €350m in exchange for €100m in new money invested in the form of a subordinated loan. But the proposal has failed to win the necessary backing to proceed.

According to the company, Sanitec’s operations continue to be profitable. In 2008 it recorded preliminary recurring Ebitda of more than €100m on sales of about €880m.