Reuters: RLPC-Hilding Anders Overhauls Debt After Failed Sale-Bankers

The private equity owners of Swedish mattress maker Hilding Anders are repaying some of the company’s debt with a fresh 350 million euro ($468.49 million) investment from KKR and extending the maturity of the company’s loans, bankers told Reuters.

LONDON, Aug 9 (Reuters) – The private equity owners of Swedish mattress maker Hilding Anders are repaying some of the company’s debt with a fresh 350 million euro ($468.49 million) investment from KKR and extending the maturity of the company’s loans, bankers said on Friday.

The move gives Hilding Anders a more stable long-term debt structure after a failed sale earlier this year. The debt repayment also strengthens the company by deleveraging its balance sheet.

Hilding Anders is owned by private equity firm Arle Capital Partners – previously Candover Partners – which bought it in 2006; debt fund Mezzvest which invested in 2009; and the company’s management, according to its website.

The owners hired Deutsche Bank to run a sales process in early 2013 but the sale stalled after bids came in lower than price expectations. Plans to issue bonds also failed amid tough market conditions, banking sources said.

The company is currently amending and extending its existing leveraged loans via Deutsche Bank to remove looming debt maturities and get the company’s finances in better shape for a possible sale if the process is revived, investors and bankers said.

KKR is also making a new 350 million euro capital injection via a Payment In Kind loan at the holding company level which will be used to prepay some of Hilding’s debt.

KKR and Arle were not immediately available to comment. Hilding Anders declined to comment.

KKR’s investment will reduce Hilding Anders term loan B by 210 million euros, its acquisition facility by 58 million euros, and its revolving credit facility by 47 million euros. The company’s balance sheet will also be bolstered with 20 million euros, bankers added.

Lenders have also been asked to extend the maturity on some of Hilding’s remaining debt by three years in return for a margin increase of 150 basis points (bps).

The term loan B and acquisition facility will then pay 475 bps over Euribor, the revolving credit will pay 450 bps and a second lien tranche will pay 550 bps, bankers said.

Lenders have been offered an additional 50 bps to agree the amendments and extend the debt, bankers said. Commitments are due in mid August.

BETTER SHAPE

The changes to Hilding’s debt will delever the company from around 7.4 times debt to earnings currently to 4.3 times total debt, bankers said.

KKR will earn accrued interest on the capital injection and could also make substantial profits when the company is sold. KKR is also expected to be offered an option to covert some of its investment into equity at a future date, bankers added.

The bedmaker, which was established in 1939, has about 6,900 employees working in 40 countries. It has been consolidating in Europe and Asia and has made 14 acquisitions in the past decade. ($1 = 0.7471 euros)