QuattroR backs paper specialist Burgo

Alessia Argentieri
30 September 2020

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Turnaround fund QuattroR has acquired Italian paper manufacturer Burgo.

The deal was structured via a newco, which will be equally owned by QuattroR and the founding Marchi family through its holding company Holding Gruppo Marchi (HGM). The newco will control 91% of Burgo.

The investment includes a €70m capital increase entirely financed by QuattroR. This injection will be primarily used for reducing Burgo's existing debt, thus allowing the termination of its restructuring plan and bankruptcy procedure, filed by the company under the Italian Bankruptcy Law in 2015. As part of the transaction, QuattroR will also acquire some of the equity-like instruments underwritten by Burgo's lenders in 2015.

QuattroR and HGM have also reached a separate agreement with Burgo's minority shareholders, including Mediobanca, Generali and Italmobiliare, which will all roll-over their minority stakes in the company. As part of the transaction, Burgo has come to an agreement with its historical lenders, as well as two new lenders, which will continue to support the company with a new financing package.

QuattroR intends to consolidate Burgo's market position in its core segments of graphic and speciality papers, while accelerating its expansion in new and innovative verticals, including containerboard, packaging and recycled paper. This plan will be implemented in partnership with Burgo's current management team, led by CEO Ignazio Capuano, who will continue to lead the business.

Following this transaction, QuattroR Fund will be around 50% deployed. The vehicle invests in Italian mid- and large-cap companies with solid business fundamentals, in need of fresh financial resources to rebalance their capital structures and undertake ambitious relaunch and restructuring plans.

The fund's portfolio currently includes controlling stakes in heavy lifting business Fagioli, ceramic tiles manufacturer Gruppo Ceramiche Ricchetti and fashion house Trussardi.

Company
Established in 1905 and headquartered in Altavilla Vicentina, Burgo is a manufacturer and distributor of graphic paper for magazines, speciality paper and containerboard for packaging.

The company employs 3,400 staff across 12 production facilities (11 based in Italy and one located in Belgium).

Burgo generated EBITDA of €134m and net income of €10m from consolidated turnover of €1.7bn in 2019, with a production of approximately of 2 million tonnes of paper and containerboard.

People
Burgo – Ignazio Capuano (CEO).
QuattroR – Francesco Conte (CEO).

Advisers
Equity – Gatti Pavesi Bianchi (legal); KPMG (financial due diligence); New Deal Advisors (financial due diligence); Willis Towers Watson (insurance due diligence).
Company – Boston Consulting Group (financial due diligence); Houlihan Lokey (corporate finance);Giliberti Triscornia e Associati (legal).