FRANCE - End in sight for Carlyle's Otor misadventure

According to press reports, the private equity firm expects to sell the business for EUR 220m, not including net debt in excess of EUR 160m. Thanks to an increase in demand for corrugated board, the company, 5% of which is listed on Euronext Paris, saw its share price soar.

Carlyle acquired a 20% stake in Otor for EUR 45m in February 2000, when the target company was on the verge of bankruptcy. Just over two years later, in March 2002, the buyout firm launched an arbitration procedure claiming that, as the company had failed to meet agreed profitability targets, it should be allowed to assume majority control. Otor founders Jean-Yves Bacques (CEO) and Michele Bouvier (managing director) unsuccessfully sought to prevent the arbitration procedure.

In April 2005, the arbitration court ruled in Carlyle's favour and ordered Otor to allow Carlyle to convert its bonds into shares, enabling it to take majority control. Bacques and Bouvier took the decision to the Paris appeals court, which reinforced the original decision.

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