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Report: Junior creditors halt PE firm Triton's plan to restructure Galapagos

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Report: Junior creditors halt PE firm Triton's plan to restructure Galapagos

A consortium of junior creditors have thwarted a plan by European private equity firm Triton to place industrial company Galapagos Holding SA into administration in the U.K. and to force through a proposed financial restructuring of the business, The Wall Street Journal reported, citing people with knowledge of the matter.

Triton, which acquired Galapagos Holding in 2014 for €1.3 billion, filed an application in August with a U.K. court to place the business into administration.

In response, the junior creditor group fired a Galapagos Holding board member and canceled the filing for the proposed restructuring after the company defaulted on a loan repayment. The creditors instead used their legal rights to appoint a new director to the Galapagos Holding board and applied to place the business into administration in Germany, where the company largely operates.

Whether the case should proceed in Germany or the U.K. will now be decided by a judge in Germany, the publication noted.

According to allegations from Galapagos Holding's junior creditors, Triton is trying to force them to incur substantial losses on approximately €250 million of loans made to Galapagos Holding as part of a broader debt restructuring plan, the unnamed sources told the Journal. Under the planned restructuring, senior lenders including Goldman Sachs International would stand to get their entire money back.

Earlier in 2019, Galapagos Holding launched a restructuring to pare its unsustainable debt load, with PricewaterhouseCoopers LLP and Macquarie Group Ltd. tapped to study an outright company sale, the sources added.

Triton, however, blocked the sale process by withholding key financial information from potential suitors to prevent a potential loss, the Journal added, citing people familiar with the junior creditors' thinking. The junior creditors reportedly believe Triton intends to use the administration process to raise its shareholding in Galapagos Holding at a lower price than it paid in 2014.

As a result of the obstruction, Triton could not find any potential buyers for Galapagos Holding and pledged to invest a further €140 million in the company in an offer that valued the company at approximately €505 million.

The Journal quoted a Triton spokesman as saying that the auction was "proper and independent," and that none of the more than 17 potential interested parties was able to outbid Triton's proposal.

In June, Triton and other senior creditors moved to shift Galapagos Holding's head office from Luxembourg to the U.K., a move that would allow the private investor to restructure the company without the approval of all its creditors.