Mezzanine Management in dental PTP

In an equity-less transaction, the London-based mezzanine provider has backed the £12.1m offer to take private Integrated Dental Holdings.

Mezzanine Management, the UK mezzanine and private equity firm, has provided £9.5 million (€14.5 million; $17.3 million) of mezzanine debt to fund a cash offer to take private Integrated Dental Holdings (IDH), one of the UK’s largest providers of dental care.

The cash offer of 40 pence per share values the equity in IDH at approximately £12.1 million. The buyout is being led by the management team headed up by chief executive David Hudaly and includes chairman Matthew Allen, finance director Andrew Morris and non-executive director Luke Johnson.

Two non-executive directors of IDH, Graham Smith and John Tiernan have not recommended the offer. No counter bid has been received.

IDH generated turnover of £68.8 million and EBITDA of £4 million in the year to October 31, 2003. The company is the only UK dental company to have been selected for the UK government’s “Options For Change” pilot scheme to increase access to National Health Service (NHS) dentists.

In a statement, Rolf Brien, a managing director at Mezzanine Management, said: “We have been attracted by the company’s dominant market position, the anticipated growth in the UK dental market, particularly in the NHS segment and, in particular, the quality of IDH’s management team.”

The transaction reflects the increasing use of mezzanine finance in management buyouts without an equity sponsor. In 2003 the number of transactions using mezzanine finance without an equity sponsor rose by 64 percent from 22 in 2002 to 36 in 2003, according to research published by Mezzanine Management with data compiled by Initiative Europe.

Hammonds advised Mezzanine Management; Pinsents and KBC Peel Hunt (financial) advised Diverse Holdings Limited (the company formed specifically to make the offer) and Altium Capital advised the independent directors of IDH.