Alt-Aktionäre müssen bluten und werden nur noch 5% des neuen Kapitals halten. So sieht es der Plan vor. Hybride 10%, Senior Holders auch einen HC verkraften usw....
Pfleiderer presented part of its syndicate with a restructuring plan today (17 February). The German wood manufacturer is asking senior lenders holding the Western European debt (Financial Group) to swap 20% of their claims into equity and 10% into a convertible bond, said a source close to the situation. It aims to complete the restructuring by the end of 2011. Following a capital increase, new money providers are expected to own around 60% of the equity.
The company’s restructuring plan features two key stages. In the first stage, senior lenders to the Financial Group would exchange their EUR 736m debt into a EUR 515m new senior tranche and a EUR 74m convertible loan. In return for swallowing the 20% haircut senior lenders will receive 85% of the equity. Holders of Pfleiderer's EUR 329m hybrid equity will receive a 10% stake in the company in exchange for a 100% write-off, while common shareholders will be left with 5% of the equity, the source said.
In the second stage, new investors would provide EUR 150m via a capital increase that would dilute the new shareholders. The new money providers would end up with around 60% of the equity, while the senior lenders’ 85% stake would be diluted to 34% and hybrid and old equity holders’ stakes drop to 4% and 2%, respectively. The plan is based on an intrinsic company value (after the cash capital increase and the disposal of the North America subsidiaries and Thermopal) of EUR 1.1bn.
About EUR 100m of the capital increase proceeds will be applied to repay both senior and new super senior debt, with the remainder supporting the business, the source said.
The EUR 272m debt facilities sitting in the Eastern European subsidiaries (BC East) will be rolled over and amortised, the source said.
Net debt post restructuring, including the hybrid equity, will decrease by EUR 820m. A new EUR 515m senior term loan split into A and B tranches maturing in 2015 will replace the current senior debt mix of syndicated loans, Schuldschein and bilateral loans, according to the source. Based on projections for 2011, net leverage, including the group’s convertible bond, will fall to 5.9x from about 15x.
Financial Group syndicated loan facilities currently total EUR 553m, split into A and B term loans and a revolver maturing in 2013 that pays Euribor+ 525bps. The rest of the senior debt is made up of EUR 155m Schuldschein and EUR 53m bilateral loans.
Following the restructuring, financial net debt is expected to be EUR 854m, down from EUR 1.67bn (including hybrid debt). Total senior bank debt (excluding North American subsidiaries) is expected to be EUR 634m, the source said.
Disposals and Liquidity Bridge
Pfleiderer intends to sell its North American entities (NA) alongside wood manufacturing subsidiary Thermopal as part of the restructuring, the source said. The plan assumes that the assets will fetch around EUR 100m and EUR 60m respectively.
The proceeds from the disposal of NA would replenish the company’s cash balance and repay senior debt, the source said. Post restructuring the company (including BC East) is expected to have around EUR 105m of cash on balance sheet.
Pfleiderer expects to contact buyers, sign NDAs and distribute IMs in April and receive indicative offers by May. It aims to complete the process by mid- to end-July 2011.
Proceeds from the sale of Thermopal will first pay down senior debt, and then be relent back to the company to address its short term liquidity gap in the form of a EUR 60m super senior loan maturing in 2011 at Euribor+ 600bps cash interest. The company needs 100% lender consent to place the proceeds into the escrow account, and the backing of 95% of lenders to be able to release them. Creditors were approached last week with a waiver request for both parts, according to the source.
The bridge will be necessary as the Financial Group could run into liquidity issues in April 2011 if banks insist on full payment of interest due, and in case operational restructuring or asset sales encounter delays, the source noted.
Pfleiderer devised two alternative solutions to the Thermopal asset sale to close the liquidity gap. New money could be provided on a super senior basis by senior lenders or other parties, which would require 100% lender consent, the source said. Alternatively the company could ask senior lenders to defer EUR 53m of interest payments from April to December 2011.
Existing senior and hybrid lender Centerbridge presented a term sheet on 11 February for a EUR 50m term loan bridge financing. The loan would mature in December 2011 and pay E+ 700bps cash and 500bps PIK interest, a 200bps arrangement fee and 200bps exit fee.
Diverging interests
Since the end of last year, Pfleiderer’s banks have begun offloading their exposure. Several distressed debt desks traded the German company’s loans in the low-70s. As a result about 34% of the syndicated loans are now in the hands of hedge funds, including Centerbridge, Strategic Value Partners, Texas Pacific Group, Noonday, First Eagle and Oak Hill, the source said. Centerbridge also holds 26% of the equity like hybrid debt.
The consensual implementation of the company’s restructuring plan requires 100% of senior lenders and 75% of hybrid holders. But the presence of both hedge funds and par lenders in the syndicate raises the prospects that diverging interests could emerge during the restructuring process, said two hedge fund investors. Alternative funds could block the company proposal and ask for additional haircuts in exchange for a bigger portion of the equity, they noted.
Hedge funds could also end up building their own separate lender group, noted the investors. Senior lenders retained One Square Advisers, but other financial adviser boutiques are pitching to the funds for a separate role, advisers told Debtwire.
Pfleiderer operates in three distinct key geographies: Western Europe, Eastern Europe and North America. Debt sitting at its Eastern European operations is separate from the rest of the group, with some crossover holdings. Despite the neat separation, some Eastern OpCos operate joint ventures with the Western companies. BC East lenders have the power to accelerate and enforce in the event of a cross default, but are expected to keep out of the Financial Group restructuring and avoid cash flows from East to West, the source said.
Pfleiderer’s standstill terminates at the end of March 2011. The company is advised by Lazard and Hengeler Mueller. The syndicated loan steering committee comprises Commerzbank, Deutsche Bank, KfW, RBS, UniCredit and WestLB. WestLB and ING are steering committee members on the Schuldschein and bilateral facilities, the source sai
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