Oaktree Capital to Take Over Panrico

Oaktree Capital has presented a debt restructuring plan for Spanish doughnut maker Panrico, Reuters reported Thursday. The plan includes a write-down on Panrico’s loans, to 60 million euros ($79 million) from 350 million euros. Another 115 million euro would be written off completely, and Oaktree would put 105 million euro into the company to keep business running, Reuters wrote.

(Reuters) – U.S. distressed investment fund Oaktree Capital has presented a debt restructuring plan for Spanish doughnut maker Panrico one year after the company completed its first debt for equity swap, people close to the deal said on Thursday.

The plan, which was presented at a meeting with Panrico’s lenders this week, involves another drastic write-down on Panrico’s loans, to 60 million euros ($79 million) from 350 million euros, as the company struggles to improve its earnings, the sources said.

Another 115 million junior ranking loan would also be written off completely, the sources added.

In addition, Oaktree is offering to inject 105 million euros of new cash for Panrico to keep the business running.

Of that, 95 million euros would go into the company as a super-senior, six-year, payment-in-kind (PIK) loan with interest of 10 percent, while 10 million euros would be injected as preferred equity, the sources added.

In addition, Panrico’s existing 30 million euro revolving credit facility would be rolled into the new 95 million euro loan, resulting in a total facility of 125 million euros.

The equity in Panrico, which is already owned by lenders, would be redistributed, with 30 percent going to lenders of the current 350 million euro loan, 20 percent to super-senior facility lenders and 50 percent to Oaktree for its equity contribution.

This second debt for equity swap will be carried out through lenders enforcing on their security at a Luxembourg holding company of Panrico. The enforcement is expected to take place in November.

Panrico lenders took control of the company in September 2010 when 605 million euros of debt, put in place in 2005 to back the buyout by Apax Partners, was reduced to 350 million.

At the time Apax lost control of the business. ($1 = 0.751 Euros) (Reporting by Isabell Witt; Editing by Helen Massy-Beresford)