LONDON (Reuters) – Privately-owned Swedish heating and plumbing products supplier Ahlsell is asking its lenders to relax covenants on its loans, two sources close to the talks said on Tuesday.
In exchange, Ahlsell is offering some upfront fees, an increase in margin spreads as well as a small repayment of its debt, the sources said.
Lenders are now mulling the proposal ahead of responses due in approximately two weeks, both sources said.
A majority of lenders were supportive of the proposals during pre-marketing talks with the company and the sponsors, according to one source close to the company.
Ahlsell was acquired in 2006 by Cinven [CINV.UL] and Goldman Sachs Capital Partners.
Ahlsell and sponsor Cinven both declined to comment.
Goldman Sachs (GS.N) Capital Partners could not immediately be reached for comment.
The sponsors tapped the European syndicated loan market in 2007 for a 700 million Swedish crowns loan arranged by Morgan Stanley and Nordea, according to Thomson Reuters LPC data.
That loan was designed to re-leverage the company after a strong performance, banking sources said at the time.
This year, Ahlsell reported first quarter sales of 4.76 billion Swedish crowns, with earnings before interest, tax, depreciation and amortisation of 245 million Swedish crowns.
In the secondary market, indicative average bids on Ahlsell’s euro-denominated BC tranche were up to 43.68 percent of face value from 43.5 percent a week ago, while the Swedish crowns-denominated tranche was up to 42.87 percent of face value from 42.5 percent in the same period, Thomson Reuters LPC data shows.
(Reporting by Zaida Espana; Editing by Jon Loades-Carter)