Dutch DIY retailer Maxeda faces debt restructuring, say sources – Reuters

(Reuters) – Dutch DIY retailer Maxeda is in debt restructuring talks with lenders and its private equity owners including KKR following a failed sales process last year, according to two banking sources.

Under the terms of the proposed debt restructuring, the group’s private equity owners KKR, Permira, Alpinvest and Cinven will write off up to 200 million euros ($212.58 million) of junior debt in return for a maturity extension on Maxeda’s existing B and C loan tranches, the bankers said.

The margins on the debt will also be increased from 400 basis points (bps) to 550 bps over Libor with a 1 percent floor, one of the bankers said.

“The sponsors want to equitise the mezzanine in return for extending maturities on the loans, the question is whether the senior lenders will be happy with that,” the banker said.

Alpinvest and Cinven declined to comment, Permira, KKR and Maxeda were not immediately available for comment.

SECONDARY RISE
The DIY chain is part of the Maxeda Group, previously known as Vendex, which was acquired in 2004 for 1.8 billion euros by the consortium of financial sponsors.

The buy-out debt was refinanced in 2007 with a 1.075 billion euro loan which was underwritten by ABN Amro and Citi. That loan comprised a 462.2 million euro tranche B, a 462.2 million euro tranche C and a 150 million euro revolving credit facility, according to Thomson Reuters LPC data.

That deal failed to syndicate which resulted in Citi selling its entire 462.2 million euro share back to KKR in 2010 at a discount.

The buyback was funded with existing cash, an equity contribution by Maxeda’s shareholders and a 170 million euro mezzanine loan arranged by KKR Capital Markets. It is this loan that the financial sponsors are looking to write off, the banker said.

On Thursday Maxeda’s debt was trading at 97 percent of face value in Europe’s secondary loan market, according to data from Thomson Reuters LPC, a rise of just over five points since Monday April 6.

“The rise of the debt in the secondary market would suggest that the proposal is not bad,” said a second banker.

Maxeda’s private equity owners tried to sell the business last year but the process failed after offers came in below an acceptable level.

The DIY chain has faced falling revenues over the last year following a general decline in the DIY retail sector in the Netherlands.