Reuters – Blackstone Selling Kloeckner Pentaplast

Blackstone Group is set to announce the sale of its debt-laden German plastic films group Kloeckner Pentaplast to hedge fund SVP and junior lenders, three people familiar with the matter said, Reuters wrote Thursday. These people on Thursday said that senior lenders would get back 840 million euros of loans at face value, but that Blackstone would lose the remaining equity stake worth about 100 million euros ($127 million).

(Reuters) – Blackstone Group LP is set to announce the sale of its debt-laden German plastic films group Kloeckner Pentaplast to hedge fund SVP and junior lenders, three people familiar with the matter said.

 

These people on Thursday said that senior lenders would get back 840 million euros of loans at face value, but that Blackstone would lose the remaining equity stake worth about 100 million euros ($127 million).

 

SVP and junior lenders will be handed the keys to the company later on Thursday or Friday following a lengthy restructuring process after securing debt financing of 650 million euros from Jefferies as well as committing 190 million euros of equity to pay senior lenders back their debt.

 

Junior lenders will also wipe out 450 million euros of junior debt as part of the move to gain control of the company.

 

The deal needed to complete before a covenant breach waiver expired on June 22 when Blackstone and senior lenders Oaktree could enforce their debt restructuring proposal as the firm would be in default of its loan repayments.

 

Senior lenders wanted to restructure the company by reducing senior debt to 500 million euros from 850 million in a debt-for-equity swap and write off 450 million euros junior debt. This would reduce the company’s leverage to around 2 times. Oaktree would take control of the company and sell a portion of it back to current owner Blackstone, bankers said.

 

Blackstone bought Kloeckner from Cinven in 2007, backed by 1.25 billion euros of leveraged loans, according to Thomson Reuters LPC data. The firm has struggled with higher raw materials costs in a difficult economic climate as well as high leverage, around 10 times the company’s 130 million euros EBITDA. ($1 = 0.7873 euros) (Reporting by Alexander Huebner and Claire Ruckin; Editing by Elaine Hardcastle)