Reuters: Private Equity: RLPC-Kloeckner Pentaplast sale kick off

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RLPC-Kloeckner Pentaplast sale kick off Apr 30th 2012, 15:38 Mon Apr 30, 2012 11:38am EDT * Kloeckner attracting PE and trade interest * SVP not submitting bid * Bid will have to cover payout of 850 mln euros of snr debt By Claire Ruckin LONDON, April 30 (Reuters) - The sale of debt-laden German plastic films group Kloeckner Pentaplast, struggling with higher raw materials costs in a difficult economic climate, has kicked off, with first round bids due this week, banking sources said on Monday. Lazard is pushing ahead with a sale of the company triggered after hedge fund SVP and junior lenders rejected a consensual restructuring of Kloeckner's 1.3 billion euro ($1.7 billion) debt pile put forward by owners Blackstone and senior lender Oaktree. [ID: nL6E8FB56P] The firm has attracted interest from private equity and trade buyers, the banking sources said. Blackstone and SVP declined to comment. SVP and junior lenders are trying to find investors to back a bid for Kloeckner. They will not put in a bid for the company this week after failing to sign a non-disclosure agreement. Instead, they are preparing a separate proposal which they will put to the company - in their capacity as lenders - at a later stage, banking sources said. The junior lenders and SVP have threatened litigation against the company to avoid a 450 million euro junior debt write-off being included in the debt restructuring proposal, hiring litigation boutique Quinn Emanuel. The expectation is that the threat of litigation is being used as an M&A tactic which will be removed if their offer to buy the company is accepted and the wider sale process stopped, bankers said. It is likely an offer would be accepted if it repays senior lenders their 850 million euros debt. The M&A process can continue until June 22. At that point, a covenant breach waiver expires and senior lenders can enforce the debt restructuring proposal as the company will be in default of its loan repayments, bankers said. Blackstone bought Kloeckner from Cinven in 2007, backed by 1.25 billion euros of leveraged loans. A debt restructuring proposed that Blackstone would reduce its majority stake and co-own Kloeckner with Oaktree, wiping out junior debt. They would reduce senior debt to 500 million euros from 850 million in a debt-for-equity swap and wipe out 450 million euros junior debt split between mezzanine and second lien loans, taking leveraged to around 3.8 times the company's 130 million euro EBITDA compared to the current level of 10 times. ($1 = 0.7542 euro) (Editing by Dan Lalor) Link this Share this Digg this Email Reprints

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