(Reuters) – Private equity firm TowerBrook Capital said on Monday it had reached an agreement to take control of French debt-ridden auto parts distributor Autodistribution Group.
The deal, at a time of slumping sales in the European car industry, will see Autodistribution’s debt slashed and new management brought in.
A majority of lenders have accepted a debt-for-equity swap, which will reduce the company’s debt from approximately 600 million euros ($755.6 million) to 140 million euros, a source familiar with the transaction said.
TowerBrook said it will obtain a 62.5 percent stake, the lenders will hold a 21.5 percent stake, while Bahrain-based private equity firm Investcorp INVB.BH (INVBq.L), the company’s previous owner, will retain a 16 percent stake.
TowerBrook will invest 88 million euros, while Investcorp will invest 22 million euros into the company, the source said. A further 50 million euros will made available for future acquisitions.
Autodistribution’s chief executive Alain Redheuil will be replaced by TowerBrook operating executive Olivier Roux after completion of the deal. Towerbrook’s Gerd Siekmann will become chairman of the board.
Investcorp acquired Autodistribution in 2006 with a 530 million euro loan arranged by Citigroup.
The restructuring is expected to complete in the next few weeks. Until then, Autodistribution’s holding companies Part Holdings and Autodis — which hold all of the debt — will be subject to the ‘sauvegarde’ procedure, a recently introduced French pre-bankruptcy measure inspired by U.S. Chapter 11 agreements.
Autodistribution’s operating company, central purchasing organisation, subsidiaries and its network will not be affected by this procedure and will continue business as usual, TowerBrook said.
After the restructuring, Autodistribution’s financial debt excluding available cash, will be below 2.5 times estimated 2008 earnings before interest, tax, depreciation and amortisation (EBITDA).
Autodistribution is expected to report a 43 percent increase in 2008 sales to 1.1 billion euros, TowerBrook said.
(Reporting by Zaida Espana and Tom Freke; Editing by Rupert Winchester)