Materis has completed the restructuring of its €2bn buyout loan in a deal that allows French investment company Wendel to retain its equity stake in the business in exchange for €45m in new equity and keeps creditors whole.
According to the company the revised capital structure ensures Materis’s liquidity until 2013.
Despite the successful conclusion, an adviser on the deal cautioned: “You won’t see many deals like Materis, it is unique in that it is a market leader and people were willing to give it the benefit of the doubt. It is not a blueprint.”
The main features of the deal are a deferral of €290m of amortisation payments on its term loan A and acquisition facility until 2013, and the exercise of a toggle feature on its mezzanine loan so that interest will roll up for the rest of the life of the loan, freeing up another €70m of liquidity between now and 2013.
The company is paying all lenders a consent fee of 25bp, and will increase the margin on its €370m amortising debt by 75bp, again payable in PIK.
Lenders will also make an additional €100m acquisition/capex facility and €40m basket of factoring available to the company.
Covenants have been reset on the basis of a revised business plan taking into account the economic downturn and the company will be allowed to perform debt buybacks in the secondary market.
The equity holders will contribute their €45m in the same proportions as the initial 2006 investment, a 4:1 ratio of €36m for Wendel and €9m for the 550 manager investors of Materis.
The debt package structured in 2006 for the acquisition of Materis by the Wendel group included €1.55bn of senior debt, €140m of second lien, and €260m of mezzanine.
According to Wendel the amendment request received strong support from the company’s pool of 199 lenders, with unanimous consent from the mezzanine lenders and 99% consent from the senior lenders.
JPMorgan and Rothschild advised on the deal.