LONDON (Reuters) – Private equity firm Charterhouse Capital plans to sell UK chemicals company Lucite International, investors said on Friday after a briefing from the firm late the previous day.
Charterhouse told the briefing it had reached an agreement to sell Lucite to a Japanese trade buyer, investors said.
The buyer is chemicals, fibres and plastics manufacturer Mitsubishi Rayon Co (MRC), a trader and an investor said.
Charterhouse Capital declined to comment.
The potential sale is not subject to financing, one banker said.
Further similar sales are anticipated as trade buyers flush with cash pick over private equity firms’ portfolios, while exits such as IPOs and secondary or tertiary buyouts remain closed due to the difficulties of raising finance.
The news lifted the secondary price of Lucite’s $950 million leveraged loan as embattled investors look forward to repayment at par, or face value, instead of owning an impaired asset.
Average bids on Europe’s top 40 leveraged loans were 64.78 percent of face value on Thursday, according to RLPC data.
The repayment will also give funds additional cash to reinvest in the market.
“There’s been a sigh of relief,” a banker said.
Lucite’s term loan B (TLB) rose to 87 percent of face value on Friday, up 16 points from Thursday’s bid of 71, a trader said. The company’s Payment In Kind loan was quoted at 65 on Friday, up from 46.66, RLPC data shows.
A second trader put the TLB higher after a 20 point rise to 90-95 on Friday morning.
Charterhouse Capital is also seeking a covenant waiver for the loan for the next two quarters from lenders to the TLB and revolving credit facility in exchange for a 25 basis points fee, the banker said.
The waiver, which needs approval from just over 50 percent of the syndicate, is set to be passed to allow the sale, which will give funds valuable funds for reinvestment, the banker and the trader said.
Responses to the waiver are due on Monday, Nov. 10.
Ratings agency Standard & Poor’s said in October it may cut Lucite International’s long-term B rating on worries about the effects of current macroeconomic conditions on the group’s operating performance and liquidity.
By Zaida Espana
(Reporting by Zaida Espana; Editing by David Holmes)