PAI Takes Hit as Lenders Wrestle Control of Monier

LONDON (Reuters) – A consortium of three debt investors has won control of French roofing materials group Monier, forcing previous owner PAI Partners to take a 256 million euro ($358 million) hit.

Apollo Management [APOLO.UL], TowerBrook and York Capital secured the backing of Monier’s senior lenders at the end of last week, a spokeswoman for Monier said on Monday.

The senior lenders will take all of the shares in Monier — which struggled to pay its debt as earnings collapsed over the past year — in exchange for halving the company’s 1.9 billion euro debt load before the end of the year.

The consortium’s aggressive “loan to own” strategy in facing down the owners may encourage other debt investors as they look to profit from restructuring heavily-indebted companies, often owned by private equity houses.

Reuters reported last week that Monier’s senior lenders were confident their proposal would be accepted despite a last-minute bid from junior lenders to block the proposal. [ID:nLQ625931]

Previous owner Lafarge (LAFP.PA) retained a 35 percent holding in Monier when PAI Partners bought the group for 2.4 billion euros in 2007, but will lose its stake.

Monier’s debt load will be cut to about 700 million euros of senior debt and 300 million of payment in kind loans, where interest payments can be delayed.

Senior lenders have also agreed to provide the company with a new 150 million euro credit line, as well as slashing the interest rate the company has to pay on senior debt.

The new capital structure allows Monier to keep more debt on its balance sheet than would be the case if it paid normal market rates, a point made by junior lenders when they made their unsuccessful late bid to block the deal. (Reporting by Tom Freke; Editing by Dan Lalor) ($1 = 0.7154 euro)