Carl Zeiss Preps Second Equity Injection

LONDON (Reuters) – Optics specialist Carl Zeiss AG is poised to prop up its eyeglass lens maker Carl Zeiss Vision with a second equity injection which will dilute the shareholding of private equity firm EQT, two sources said on Thursday.

Carl Zeiss Vision, which was formed by the merger of Sola International with the eyeglass lens division of Carl Zeiss in 2005, is currently in a debt standstill with its lenders after breaking its loan covenants for a second time in September 2009.

EQT and Carl Zeiss AG have reached an agreement that Zeiss will supply fresh equity which will be presented to Carl Zeiss Visions’s lending syndicate shortly, an investor said.

“A new money proposal will be forthcoming soon and that money will come from Zeiss and not EQT,” an investor in Carl Zeiss Vision said.

EQT declined to comment.

Carl Zeiss Vision initially ran into trouble in September 2008, when Carl Zeiss and EQT made a first 35 million euro ($48.56 million) cash injection, but these funds ran out in September 2009 and the company breached loan covenants again, sources said.

Lenders including Avoca, Commerzbank, Deutsche Bank, Lloyds and Prudential M&G have demanded a second equity injection which EQT is not willing to meet, sources said.

Zeiss’s fresh equity injection will dilute EQT’s equity stake and shareholding although the private equity firm is expected to retain an interest in the business, they added.

“Zeiss will put the money in and run the show going forward,” the investor said.

Carl Zeiss Vision recapitalised its 885 million euro debt in March 2007 in a deal led by Deutsche Bank and Mizuho Bank, according to Thomson Reuters LPC data.

By Alexander Huebner and Tessa Walsh

(Reporting by Alexander Huebner and Tessa Walsh; Editing by Rupert Winchester)