Stahl Lenders Support Debt Restructuring

LONDON (Reuters) – Dutch specialist coatings firm Stahl International has secured 100 percent support from senior, second lien and mezzanine lenders over its debt-for-equity restructuring proposal, a source familiar with the situation said on Monday.

The proposal will lead to an almost 40 percent reduction of Stahl’s debt to less than 200 million euros ($297.6 million) from 360 million euros.

The restructuring is expected to close in the first quarter of 2010, French private equity sponsor Wendel SA (MWDP.PA) said last week.

Under the proposal, Wendel will inject 60 million euros into the business and will increase its stake to 92 percent from 48 percent.

Mezzanine, second lien lenders and management will hold the rest of the equity after the close of the deal.

The 60 million euros equity injection will be used to buy back at least 69.1 million euros of existing senior debt, the source said.

In addition, 28 million euros of second lien debt and 64 million euros of mezzanine debt will be cancelled and converted into 4 percent and 2.1 percent of equity respectively, the source added.

The restructuring will involve a revised debt structure, including 150 million euros of senior secured debt, paying an interest margin of 200 basis points (bps) over EURIBOR in cash plus 2 percent payment-in-kind (PIK).

There is also a maximum of 47.5 million euros of junior secured debt, paying fixed capitalised interest of 800 bps.

Lenders will also provide a 25 million euro revolving credit facility.

Wendel and Carlyle [CYL.UL] acquired Stahl in 2006, backed with a 460 million euro debt package arranged by JP Morgan and Lehman Brothers. (Reporting by Alasdair Reilly; Editing by David Holmes) ($1=.6720 Euro)