(Reuters) – European private equity firm CVC is in exclusive talks to acquire Finnish insulation material maker Paroc, two sources familiar with the matter said on Wednesday.
Reuters reported in August that CVC had submitted first-round bids for the asset along with TPG, Nordic Capital, BC Partners and Cinven, with bids valuing the company between 700 and 750 million euros ($950 million).
Lazard has been running the sale for Paroc, which is owned by a consortium of banks and institutional investors, after being taken over by its lenders from Bahrain-based investment firm Arcapita in 2009.
CVC declined to comment. Lazard and Paroc were not immediately available to comment.
Paroc had core earnings (EBITDA) of 76.6 million euros in 2013. A price of 700 million euros would value it at 9.1 times earnings. Paroc’s closest listed peer
Rockwool is currently trading at 6.1 times earnings.
Paroc has been banking on Russia to provide growth. The country accounted for 8.3 percent of the company’s revenues last year and it is ramping up production there this year.
The company raised 430 million euros of senior secured high-yield bonds in May that included a portability clause, which allows the debt to stay in place after a change in ownership, lessening the need for CVC to raise fresh debt.
Paroc’s bond left the company with 5.2 times total debt to adjusted earnings before interest tax, depreciation and amortisation (EBITDA), and the clause allows the business to be sold in the first two years if this leverage threshold is not exceeded.
When the bond was issued, Paroc said that it expected to purchase half of its coke from Ukrainian sources in 2014. It also intended to supply its Russian business solely with Ukrainian coke, primarily from Kharkiv in eastern Ukraine, a region particularly affected by the conflict.