Luggage and bag maker Samsonite Corp. seems to be journeying back into hard times. The private equity-backed company reportedly completed a recapitalization amid a decline in international air travel.
The Financial Times said Monday that its owner, London's CVC Capital Partners Ltd., gave up equity to lender Royal Bank of Scotland Group plc (NYSE:RBS) to forestall a covenant breach this month. CVC has agreed to inject up to $175 million into the business to maintain a 60% stake. Meanwhile, Samsonite's $800 million debt will be slashed to $240 million.
Samsonite has changed private equity hands three times. CVC acquired the Mansfield, Mass., company in 2007, paying then-private equity owners Bain Capital Partners LLC, Ares Management LLC and Teachers' Private Capital, the investment arm of Ontario Teachers' Pension, $1.7 billion. Before that, Apollo Management LP owned the company in the last downturn, when it was nearly bankrupt and laden with debt from its buyout by the sponsor.
Despite Samsonite's travails, current and past, the last sponsors still managed to extract hefty profits from their bets. Whether CVC will replicate their gains remains to be seen. - Vyvyan Tenorio
