Monier Lenders Make Late Move To Block Takeover

LONDON (Reuters) – Junior lenders to French roofing company Monier have launched a late bid to block one of Europe’s biggest restructuring deals days before a crucial vote, according to a letter seen by Reuters.

Senior lenders say that a rescue package to be presented on Monday will be approved, and say they already have indications from 78 percent of senior, or first lien, lenders, that they will vote for the deal.

But a group of junior lenders sent a letter to Monier’s lender syndicate on Friday, criticising the proposed deal, that would see senior lenders take control of the company from private equity firm PAI Partners.

“You have not entered into any constructive discussion with this large lender group … we deem this irresponsible from an execution point of view,” the letter said.

Monier, bought by private equity firm PAI Partners for more than 2 billion euros in 2007, has seen its earnings collapse over the last year as demand for building materials in Europe has declined, leaving it struggling to pay its debt.

Monier’s lender syndicate comprising some 140 banks and funds is due to vote on the debt-for-equity proposal on Monday and senior lenders who are owed more than 1.5 billion euros ($2.09 billion) seem poised to gain the upper hand.

“We have tried to engage with the second lien lenders but at this point they are just angling for a bigger slice of the pie,” said a senior lender source, who declined to be named.

The deal would see junior lenders, owed about 300 million euros in second lien debt, lose most of their money, prompting them to suggest an alternative strategy.

The junior lenders, which include Boussard & Gavaudan, Credit Suisse and Halycon, pointed to “severe flaws” in the rival plan — driven by funds Apollo Management [APOLO.UL], TowerBrook and York Capital — including the high level of debt left on Monier’s balance sheet.

They also said it was unlikely the plan would meet with the required 66-percent approval rate.

If they fail to achieve this level of support, the proposal’s backers are likely to attempt a scheme of arrangement deal though courts, the junior lender letter said.

That would be costly and be “not without its legal risk and complications”, the letter added.

($1=.7177 Euro)

By Tom Freke