Candover's Ontex faces breach of banking covenants

Due to poor market conditions, it is reported that Candover has warned bankers and investors that Ontex will breach its banking covenants. This could prove to become the first large-scale failure of a highly leveraged deal in the past 18 months. Bankers are stated as supporting the appointments of Arnold de Weert as CEO, with Bert von Maleren as chairman, made by Candover. There are no current fears that the debt will have to be refinanced according to sources. Candover bought Ontex last year in a public-to-private deal valued at around €1bn, €510m of which was debt and €165m of mezzanine finance. This resulted in a deal with a near six times multiple of total debt against estimated earnings, before interest, tax, deprecation and amoritisation of €122m when it was arranged.

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