Nordic Capital’s Plastal crashes

Automotive parts supplier Plastal has filed for bankruptcy amid the auto industry's 'free fall'. Nordic Capital Fund V had invested SEK 1.5bn into the business, which makes plastic interior components for some of Europe’s largest car manufacturers.

Plastal, a European supplier of plastic interiors to the automotive sector, has filed for bankruptcy after what the company describes as an “unprecedented downturn” in the automotive industry.

The automotive sector is in free fall at the moment. A bankruptcy is the last resort.

Andrew Bennett

The company, which has been owned by Nordic Capital’s fifth buyout fund since February 2005, reported “a sharp decline in volumes during the fourth quarter 2008, followed by a further 40 percent drop in the first two months of 2009”.

Plastal counts many of the biggest names in the European car industry, such as Ford, Volvo, Alfa Romeo and Volkswagen, among its clients. It employs around 6,000 people around Europe and reported sales in 2008 in the region of €1.3 billion.

“The automotive sector is in free fall at the moment,” said Andrew Bennett, a director at Nordic Capital, in a statement, “A bankruptcy is the very last resort.”

Alfa Romeo: Plastal client

Nordic Capital Fund V acquired Plastal in 2005 and later that year supported the bolt-on acquisition of German business DNK. The fund had a total exposure to the company of around SEK1.5 billion (€129 million; $161 million), equivalent to around 10 percent of the funds holdings.

Nordic injected fresh capital into Plastal in January, but to no avail. Efforts to create liquidity via cost-cutting, sale of non-core assets as well as an application for support from the Swedish government’s support scheme were not achievable in current market conditions and the tight timeframe, said the firm.

This is the second Nordic Capital investment connected with the automotive industry to run into trouble as trading conditions have worsened.

Sweden-based roof box manufacturer Thule was recently forced to undertake a protracted financial restructuring process. It emerged from the process in January, following a debt-for-equity swap and cash injection from Nordic, with reduced annual debt repayments and still under the majority ownership of Nordic.

In defiance of widespread gloom in the fundraising market, Nordic Capital closed a €4.3 billion fund in November, surpassing its initial target and more than doubling the size of its predecessor.