Dometic, a Swedish manufacturer of refrigeration and recreational equipment, is the latest example of a debt-laden company having control shift from its private equity sponsor to its lenders.
A source close to the deal has confirmed that BC Partners is no longer a Dometic shareholder, having made a 1x multiple on the deal following a debt-for-equity swap that has left Dometic's 25 lenders in control.
Last month, Ripplewood Holdings-backed Reader’s Digest Association agreed to be taken over by its senior lenders in a pre-packaged bankruptcy that would reduce the company’s debt from $2.2 billion to $550 million. In April, PAI Partners lost control of roofing supply company Monier to its lenders, while in May, Candover Partners and Permira had their 60 percent stake wiped out in yacht maker Ferretti.
Dometic: lenders in the driving seat
There were reportedly several restructuring plans considered by Dometic's senior lenders' steering committee, which included Mizuho Financial Group, UniCredit and Nordea Bank. The plan submitted by BC Partners and mezzanine lender ICG to assuage the company's some €1.3 billion in debt was not chosen, according to a report Sunday in UK newspaper The Independent.
BC Partners purchased the company from Nordic buyout firm EQT in June 2005, paying roughly SEK6.4 billion for Dometic’s 24.93 million shares and assuming approximately SEK3.7 billion of debt. For EQT, the exit doubled its original investment.
BC Partners recently avoided having portfolio company Baxi breach its debt covenants by merging the boiler maker with Dutch-headquartered company De Dietrich Remeha Group. Baxi’s owners, BC Partners and Electra Partners, also injected around €100 million of fresh equity in the business and own a significant minority in the resulting entity.
“Baxi was a leveraged entity and was coming to the time when it had to amortise its debt,” BC Partners’ managing partner, Andrew Newington, told PEO at the time. “Performance had been perfectly okay, so it was not a huge issue from a covenant perspective. But with the markets closed today it was impossible to go out to refinance the debt, so this transaction has the double benefit of providing both scale and a good solution to capital structure issues.”