Wendel attracts sponsor interest for Stahl, may refinance, say sources-Reuters

(Reuters) Buyout group Wendel has attracted interest from its private equity peers for its leather chemicals maker Stahl, but may still opt to refinance the business instead of selling it, several people familiar with the deal said.

“A decision will be taken before the summer break,” one of the people said, adding that Wendel may conduct a dividend recapitalisation to enable it to extract some value from the company if final offers fall short of its expectations.

Bankers have been preparing up to 690 million euros of debt financing to back a sale of Stahl and some of them would also be prepared to refinance Stahl’s existing debt, banking sources said.

Wendel completed a restructuring of Stahl in 2010 after reducing debt in the business to 195 million euros ($220 million) from 350 million and injecting 60 million euros of new equity to boost its equity stake to 92 percent from 48 percent, with lenders and management holding the rest.

Wendel earlier this year hired Bank of America Merrill Lynch and BNP Paribas to find a buyer for the Dutch-based company, which has earnings before interest, taxes, depreciation, and amortization of roughly 125 million euros, the sources said.

Private equity groups such as Apollo, CVC and Cinven as well as an Asian chemicals group offered to pay as much as 8 times core earnings, while Wendel had hoped to attract offers valuing the business at 10 times earnings, they added.

Swiss-based chemicals group Clariant sold its own leather chemicals business to Stahl in 2013 for 74 million euros in cash and a 23 percent stake in the merged company. In May 2014, Stahl raised 295 million euros in loans to back that deal.

“Stahl achieves high synergies through the cooperation with Clariant and there is no reason for its owners to sell on the cheap,” one of the sources said.

Stahl’s products are used to treat leather that goes into the production of shoes, bags and car seats. The company had net sales of 512 million euros in 2014.

Wendel, Clariant, Apollo, CVC, Cinven and Bain declined to comment.