Private equity firms Towerbrook Capital Partners and InvestCorp plan to inject €110 million into beleaguered French car part distributor, Autodistribution Group, in exchange for debt write-downs by the firm’s creditors.
UK-based Towerbrook will invest approximately €88 million into the firm, while Bahrain-based InvestCorp, a previous Autodistribution investor, will invest a further €22 million. Under the terms of the agreement, Towerbrook stands to obtain a managerial stake of 62.5 percent, while Investcorp will retain 16 percent of the shareholding.
The deal is expected to complete in the next few weeks, but is subject to a number of conditions and will need to be approved by the relevant competition authorities. In the meantime Autodistribution, which employs more than 6,500 people, will be subject to a “sauvegarde” procedure, a newly implemented piece of French bankruptcy protection legislation similar to the US’s Chapter 11. The legislation forms the basis of a procedure for indebted companies to attempt to reach a restructuring agreement with creditors and, more generally, with all other stakeholders, under the supervision of the Courts-appointed receiver, called a “conciliator”.
If the plans go ahead, the firm’s debt will be cut from €600 million to around €140 million, according to UK newspaper The Financial Times.
Towerbrook executives Gerd Siekmann and Olivier Roux will become company chairman and chief executive officer respectively, replacing the firm’s current chief executive officer Alain Redhueil, who will step down and assume a non-executive position on the board.
The debt-laden firm fell into difficulties after an aggressive buy-and-build strategy by its former backers, Goldman Sachs. InvestCorp bought the firm out of receivership in February 2006 for between €600 million and €800 million, but the firm has been dragged down by what a source referred to as “debt abyss” in one of its add-on acquisitions. Despite its insolvency, Autodistribution is expected to report sales of €1.1 billion for 2008, an increase of 4.3 percent over its sales from 2007.
“We have an ambitious development plan for Autodistribution and we are happy to have reached agreement with shareholders and lenders. [It] is a strong company with growth potential,” Karim Saddi, a managing director at Towerbrook, said in statement.
Autodistribution was founded in 1962 and is active across France, Poland, Italy, the Netherlands and Morocco. In addition to the distribution business it has a car and goods vehicle repair subsidiary.
Towerbrook has around $5 billion under management and operates predominantly in Europe and the US. InvestCorp is publicly listed on the London and Bahrain Stock Exchanges and has $13 billion under management.