by Paul Whitfield | Published May 16, 2012 at 11:08 AM
Paris-listed private equity shop Wendel SA said Wednesday, May 16, that it has received expressions of interest in all four divisions of its debt-laden specialty chemicals group Materis SAS, a day after striking a deal to restructure €1.9 billion ($2.4 billion) of loans at the portfolio company.
"We have had approaches for the four units from both funds and industrial buyers," said Wendell spokeswoman Christèle Lion. Wendel has tapped BNP Paribas SA and Rothschild to find a buyer for one of Materis' units before the end of the year.
Wendel, France's largest listed buyout shop, is under pressure to offload Materis assets to ease pressure on a company that has been unable to make a dent in about €2 billion of debt that has already been restructured once, in 2009.
The buyout shop's hopes for a deal are likely to rest with the sale of either cement admixture maker Chryso or aluminates producer Kerneos, though it is also considering approaches for Parex, a mortar manufacturer. Wendel doesn't want to sell Materis Paints, which is the company's biggest unit by sales, as it believes the operation needs further improvements to realize its potential value.
Wendel has put an indicative price tag of about €700 million on Kerneos, equal to about 9 times the units Ebitda, according to a source with knowledge of the company's thinking. It wants between €425 million and €450 million for Chryso, valuing the unit at about 14.5 times its Ebit. The source was not aware of the PE shop's estimated valuation of Parex.
Much of Materis' debt dates back to Wendel's 2006 acquisition of the business for an enterprise value of about €2 billion. Wendel, which bought the business from LBO France, said at the time that it would pay about €1.01 billion for Materis equity and invest about €420 million of its own equity in the deal.
Wendel said on Tuesday that 90% of senior debt holders, 99% of second-lien and 100% of mezzanine debt holders had agreed to delay maturities on €1.9 billion of loans by between six months and two years. Materis has a total of 199 creditors, the largest of which is BNP Paribas.
"With this agreement, €118 million [of senior debt] will mature in 2013-2014, €546 million in 2015 and €925 million in 2016. The mezzanine debt, which amounts to €422 million, will mature in December 2016," Wendel said in a statement. Creditors also approved an option for Materis to issue a further €700 million of new bonds.
In return for the extension Materis will pay fees to its creditors of between 25 and 75 basis points and increase the margins on its senior debt to 450 bps. Wendel, which owns 76% of the company, and its co-investors also agreed to invest €25 million of new capital in the maker of specialty chemicals. Wendel agreed to inject €45 million of new capital in the group in return for the previous debt restructuring in 2009.
Wendel will also provide a €25 million interest-bearing liquidity line. It may be increased to €50 million in 2013, but it would be canceled and repaid if one of the company's divisions is sold.
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