SVP's Klöckner Pentaplast completes €1.9bn refinancing

According to the statement, the refinancing comprises €1.2bn in senior secured term loans (which are also denominated in US dollars), €400m in senior secured notes and €300m in senior unsecured notes.

The refinancing incorporates an ESG-linked term loan ratchet marketed to US investors, which integrates performance on ESG issues with set targets for 2025, according to the same statement.

The arrangement will fully refinance Klöckner Pentaplast's capital structure.

SVP declined to comment on whether the deal has realised any value for the GP.

A source close to the situation told Unquote that the rationale behind the timing of the refinancing was to take advantage of the opportunity in the credit markets to reduce yearly financing costs.

JP Morgan was sole physical bookrunner on the deal. JP Morgan also acted as global coordinator and joint coordinator alongside Credit Suisse. Deutsche Bank and Goldman Sachs were senior bookrunners, while Bank of America Securities and Rabobank were joint bookrunners.

In connection with the term loan, JP Morgan and Rabobank were sustainability coordinators. Wells Fargo acted as joint bookrunner.

Previous funding
Cinven and CCMP Capital Advisors acquired Klöckner Pentaplast in 2001 for €925m from German investment and property group WCM.

Blackstone acquired Klöckner Pentaplast from Cinven and minority shareholder CCMP in May 2007 in a deal that valued the company at €1.3bn, equating to a multiple of 8x EBITDA. The deal generated a 2.2x money multiple for Cinven, according to Unquote Data. JP Morgan, Lehman Brothers and Morgan Stanley provided debt to back the buyout.

Blackstone sold its majority stake in the business to Strategic Value Partners (SVP) in June 2012. SVP made an equity contribution of €190m. Jefferies provided debt to refinance the company's existing facilities, enabling a full repayment of its €800m first lien senior debt package, including accrued interest. The deal saw the company's total debt halved to €630m, according to Unquote Data.

Company
Founded in 1965 and headquartered in Montabaur, Germany, Klöckner Pentaplast produces recycled products and packaging for industries including food, pharmaceuticals and construction. The company has global operations in Europe, the US, Australia and employs 5,900 staff. It posted revenues of almost €1.9bn in 2017, according to its latest financial report.

People
Strategic Value Partners – Victor Khosla (chief investment officer).
Klöckner Pentaplast – Scott Tracey (CEO).

Advisers
Company – Kirkland & Ellis, Neel Sachdev, William Burke, Tim Volkheimer, Kanesh Balasubramaniam, Jerome Hoyle, Matthew Wilson, Nicholas Wendland, Marco Bagnato, Nicolò Ascione, Michael Chern (legal).
Debt – Latham & Watkins (legal).

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