Wrestling for control
Despite objections, and a rival bid from PAI Partners, a group of three distressed debt investors proved successful in their aggressive bid to wrestle control of French roofing company Monier through a debt for equity swap.
The restructuring deal sees Monier’s 1.9 billion euro debt load halved in exchange for senior lenders taking full ownership of the firm.
Previous owner PAI had its fingers prised from a prized asset through a combination of its rivals’ tight focus and a collapse in Monier’s earnings, which helped propel lenders into the driving seat.
Now, encouraged by the Monier deal, distressed debt investors will be running the rule over other firms, seeking out more “loan to own” opportunities amongst Europe’s heavily indebted corporates.
Until recently, many private equity firms’ strategy for such companies has been to stick it out and hope the recovery will come before banks call time on their underwater loans.
But if lenders see greater recovery prospects through a change in ownership, private equity companies may have to take a pro-active strategy to defend their investments.