Sponsor TPG has tabled a restructuring proposal that would see it retain 65% of chemicals business
Sponsor aggression is taking place against a background of general illiquidity and dire corporate performance, which means lenders are being forced to contemplate looming insolvency as the alternative to agreeing deals. Sponsors are also reacting to tough talking from their own LPs, who have been dismayed by the performance of private equity portfolios.
In exchange for the new liquidity, Vita’s senior lenders are being asked to write down €533m of a €633m debt pile and instead take a 32.5% equity stake. They have also been asked to provide a €35m revolving credit facility. Mezzanine creditors would receive 2.5% of equity in the business in exchange for their support and for providing part of the equity injection.
The deal fits into a pattern of aggressive restructuring proposals that have seen sponsors only provide new liquidity to portfolio companies in situations where lenders are prepared to “share the pain” by dramatically deleveraging the business and agreeing to accept that new liquidity comes into deals either as fairly senior debt or well-valued equity.
The rise of the trend reflects the shifting power balance between banks and cash-rich private equity houses. Last October sponsor Carlyle injected £25m into
Candover has proposed a deal that would allow it to keep a majority stake in yacht maker
Also in Italy, PAI Partners has proposed a deal that would see senior lenders to coffee-machine maker
In Sweden sponsor EQT has proposed a restructuring deal for
Last December Nordic Capital agreed a deal to retain majority ownership of sports equipment maker