Kion Group, one of the three largest forklift truck manufacturers in the world, is to receive a €100 million cash boost from its two financial sponsors, Kohlberg Kravis Roberts (KKR) and Goldman Sachs, PEO has confirmed with a source close to the group.
Kion Group was acquired for €4 billion in 2006 by a consortium including Goldman Sachs Capital Partners and KKR in one of Germany’s largest-ever private equity deals. The group was carved out of German engineering company Linde.
Kion: getting a cushion
The €100 million loan will come in the form of a payment-in-kind (PIK) note: a type of debt whereby the note holder may receive additional debt coupons instead of cash interest payments.
A source close to Kion confirmed that the company had submitted a revised business plan to lenders, under which debt covenants would be amended to avoid any breaches. No covenants have as yet been breached.
The €100 million loan is not necessarily needed under the revised business plan, the source said, but provides an “additional cushion” and leeway to better exploit the opportunities thrown up by the downturn.
Lenders to Kion will have a period of around four weeks to approve the revised business plan, the loan and covenant amendments. The company currently has net debt of around €2.6 billion.
Trading at Kion during 2008 held up relatively well amid difficult market conditions, according to the firm’s results released at the end of April. The volume of new orders was slightly down year-on-year – from €4.6 billion to €4.4 billion – while earnings increased by 5.9 percent to €358 million. However, the market for forklift trucks – dominated by Kion Group, Toyota and Sumitomo Nacco – has since contracted more significantly.