EUROPE – €400bn refinancing crisis looms

According to AlixPartners, debt reaching maturity by this years end include some EUR 136bn related to UK companies; €115bn within German firms; EUR 99bn in French businesses; and €47bn in Italian firms.

The last weeks of 2009 saw some houses begin to tackle this. Permira-backed Italian fashion house Valentino (VFG) successfully completed the restructuring of its debt, with both the investor and the Marzotto family investing €265m to buy back the company’s debt, which has a nominal value of €720m, signing a capital increase for the same amount.

But an increasing number of restructurings are seeing investors and lenders come up with solutions beyond the debt-for-equity swap. Last week, Balderton-backed UK-based Codemasters announced a restructuring that will see its private equity owners inject fresh equity into the business, while seeing its stake diluted, with a new investor being brought into the business.

With banks limited in their ability to convert debt to equity more firms are also opting for raising capital. Recently, Yellow page Italian directory business Seat PG, backed by BC Partners, CVC Capital Partners and Permira, raised €550m in a bond issue to pay back debt. But this was only a partial success –if it can be called that. The bond was originally planned at €650m, but the unfavourable market conditions forced the company to cancel a floating rate tranche.

As suggested by AlixPartners’ study, companies do have other avenues to liquidity. “Many of companies could unlock great amounts of cash though aggressive ‘self-help’ programmes, such as unlocking cash tied up in inventories, payables, receivables, overhead, trade spend and so forth. This ‘hidden money’ can be found and utilised to help them meet debt-refinancing needs. Clearly, aggressive self-help is going to be the name of the game for companies this year —or at least it should be”.

 

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• Topics
• Restructuring
• Southern Europe
• Benelux
• France
• DACH
• Nordics
• UK / Ireland