M&A Merger and acquisition
TowerBrook set for takeover of French car parts supplier
Auteur : Martin Arnold and Anousha Sakoui in London
Source : http://ft.com
TowerBrook Capital Partners, a UK-based private equity group, will this week announce plans to take over Autodistribution Group, the French car parts supplier, in a restructuring deal to slash its debts in return for a €110m ($139m) cash injection.
TowerBrook Capital Partners, a UK-based private equity group, will this week announce plans to take over Autodistribution Group, the French car parts supplier, in a restructuring deal to slash its debts in return for a €110m ($139m) cash injection.
The deal, designed to save the company’s 6,500 jobs, would be France’s first attempt at a “pre-pack”, or pre-packaged administration, via its new procédure de sauvegarde, which is similar to US Chapter 11 protection. “Pre-pack” deals, which are increasingly common in the UK, involve an agreement being struck quietly before a business goes into administration to sell it to new, or existing owners or management, while shedding some debts.
Two of Autodistribution’s holding companies plan to enter a procédure de sauvegarde, gaining enough respite from creditors to push through a debt-restructuring, before emerging with new owners and a repaired balance sheet.
The deal would see TowerBrook, best-known for buying luxury shoemaker Jimmy Choo, acquire more than 60 per cent of the company. A majority of its 150 creditors would accept the deal, cutting its debts from €600m to about €140m.
The main operating business of Autodistribution, including its central purchasing organisation, sub-sidiaries and network, which distributes 13,000 different car and truck parts via 509 outlets, would not be affected by the procedure.
Investcorp, the Bahrain-based private equity group which acquired Autodistribution for about €600m in 2006, would invest in the company alongside TowerBrook.
But Investcorp’s stake is expected to be diluted below 20 per cent.
The €110m of fresh cash from TowerBrook and Investcorp would fund working capital. A further €50m would be made available for acquisitions. Creditors would take about a quarter of the company’s equity, in return for writing off all junior and mezzanine loans and 70 per cent of senior debts.
Autodistribution, founded in 1962, appointed a “mandataire ad hoc”, or court mediator, to oversee talks with creditors after breaching bank covenants in June.
The company made €65m of operating profit last year and is forecast to have sales of €1.1bn this year. It has also been hit by a change in French law in January, cutting the time it has to pay trade creditors from 90 days to 45 days from the end of each month.
TowerBrook plans to appoint Gerd Siekmann and Olivier Roux, two of its operating partners with long experience of the car parts industry, as chairman and chief executive of Autodistribution respectively.
The French government, which last month agreed a €6bn bail-out for the country’s car industry, has been following negotiations at Autodistribution closely and pressed all sides to find a deal that saved jobs.
It would be the first deal for TowerBrook’s $2.8bn fund which it raised in November, four years after spinning out of the empire of George Soros, the financier.
While secured creditors in the UK can have a court- appointed administrator enforce a sale or reorganisation of a company, going into and out of administration in a matter of hours, in France it is up to the court to approve a restructuring.
Last articles from : M&A Merger and acquisition section
[03/02/2009] Cash-rich drug giants eyeing mergers and acquisitions
[24/11/2008] Asia Pacific finance M&A rises 20% so far in 2008
[24/11/2008] Willis Completes $2.1 Billion Acquisition of Hilb Rogal & Hobbs
Browse all articles for the section M&A Merger and acquisition