(Reuters) – Silver Point Capital is the frontrunner in the long-running auction of German sausage casing manufacturer Kalle Nalo by private equity firm Montagu Private Equity, two banking sources said.
Pamplona Capital has also shown interest in buying the company, the sources said.
At the end of 2008, Montagu appointed Sal Oppenheimer to advise on the possible sale of Kalle and discussed with banks a possible club loan to back the deal.
Progress on the sale has been slow in line with other European auctions due to the scarcity of debt financing and private equity firms’ struggle to achieve target returns on debt-financed deals.
CVC Capital Partners sold Kalle Nalo to Montagu in 2004 for an undisclosed price, backed by a leveraged loan from Mizuho.
That loan included 120 million euros ($167.3 million) of senior debt and 20 million euros of mezzanine debt.
Before it was acquired by CVC, Kalle was a subsidiary of Hoechst.
Kalle produces artificial sausage casings out of viscose, plastic and textiles. The company also manufactures sponge cloths.
(Reporting by Alasdair Reilly)