LBO France hands Terreal keys to lenders

Restructurings in France are seldom easy, but Park Square and ING managed to achieve consensus amongst fellow lenders, shareholders and management.

French building materials group Terreal has undergone a restructuring that sees control of the business pass from private equity owner LBO France to lenders led by ING and private debt fund manager Park Square Capital, sister publication Private Debt Investor reports.

Park Square is Terreal's largest institutional lender, and its second largest lender after ING. As part of the restructuring agreement, Terreal's lenders will convert a significant portion of debt into equity and become significant shareholders in the business. The company's management team will remain shareholders in the business through a restructured incentive plan.

LBO France, which acquired the business from fellow private equity firms The Carlyle Group and Eurazeo in 2005 for €860 million, has seen its equity position wiped out. The firm declined to comment.

LBO France made its investment in the business from its sixth European mid-market buyout fund, White Knight VI. The firm had anticipated this outcome, and its investors had been made aware of the situation some time ago, according to a source with knowledge of the situation. Despite the loss, White Knight VI is understood to have delivered a return in the region of 2-2.5x to date with an IRR of about 60 percent, the source said.

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