Park Square has announced that a lender-led restructuring of Terreal has been signed, resulting in lenders taking the keys to the company through a debt-for-equity swap.
The restructuring plan, spearheaded by Park Square and ING, envisages financial stability for the company through reduced interest costs and leverage, operating flexibility through long-dated debt maturities, no debt amortisation, and a covenant holiday for a year, as well as improved corporate governance.
Post-restructuring, the capital structure comprises €300 million of senior debt due in 2017, sources said,xa and €70 million of cash on its balance sheet. Due to a smaller debt size, Terreal’s annual interest expense decreases by €7 million. Finally, the equity-like instruments held by senior lenders following the 2009 restructuring have been reduced to €157.5 million, sources said.
Although the market in which Terreal operates is cyclical, the company has new facilities and operations are starting to stabilise, sources added. Annual EBITDA for the group is roughly €45-50 million, sources said
Following the restructuring, Park Square is the largest shareholder, and the second-largest lender to Terreal. According to the statement, Park Square accumulated a position in Terreal’s debt at a significant discount over several years.
Last summer, the French roof-tile maker breached its June covenants, and a mandataire ad hoc was appointed later in the autumn, according to sources.
This is Terreal’s second restructuring, having undergone the first in 2009, when it breached its September 2008 covenant. Then, the restructuring took Terreal’s total debt from €902 million to €500 million due in June 2014, and the facility paid an unchanged margin of E+250, with a one-year extension option, according to sources. However, senior lenders converted part of their debt into €402 million of notes redeemable in shares and preferred shares, paying 4% PIK – therefore not completely right-sizing its capital structure. Covenants were also reset, and lenders provided an additional super-senior €40 million through a short-term revolver facility and a factoring line.
Terreal was owned by LBO France prior to the current restructuring. It operates in the French roofing market for plain tiles, barrel tiles, and Roman-style interlocking tiles. – Sohko Fujimoto