Relevant Documents:
ProXES 2019 Financial Report (in German)
Holdco Report 2019
A bank lender has sold a piece of ProXES’ €95 million term loan B in the 60-70 price range in recent weeks, sources told Reorg.
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Some investors worry the German designer and manufacturer of food processing machinery could have difficulty meeting its net leverage covenant later this year due to the effects of Covid-19 on the business, according to sources.
The group’s debt is subject to a quarterly net leverage covenant, which was breached in the third quarter 2018. The company and its lenders subsequently agreed to a covenant reset in April 2019 following an IBR. The covenant was suspended to Dec. 31, 2019, and became effective again on March 31, 2020. The company was in compliance with its covenants at the end of the first quarter.
ProXES has the following facilities in place:
- €15 million Term Loan A, with Euribor+3.75% margin due 2024;
- €95 million Term Loan B with E+4.25% margin due 2024;
- €20 million RCF.
The term loans are subject to a margin ratchet depending on leverage. In 2019, the margins on both term loans increased by 50 basis points.
As of July 2019, the company made a special loan repayment of €14.6 million, of which €12.5 million was on the TLB and €2.1 million was on the TLA. The loans are fully secured by pledging the financial assets and other assets of ProXES GmbH.
Financials
The companies of the ProXES group develop, produce and sell machines and industrial systems, which are primarily used for the processing of food and in the cosmetics, pharmaceutical and chemical industries.
The group budget for the 2020 financial year provides for sales of about €128 million with an adjusted EBITDA of more than €18.4 million. However, the company has said that it expects the forecast earnings will not go to plan as a result of the unknown material effect of the Covid-19 pandemic on the business.
The company reported a 1% year-over-year fall in revenue to €117.8 million for 2019, falling short of its revenue budget of €135 million. The shortfall was due to the failure to achieve forecast sales revenue of €17 million for Industrial Machines and €5 million for original equipment sales, according to the company.
Adjusted EBITDA was €10.9 million for 2019, below the budget of €16.2 million, and a 24.1% year-over-year fall on 2018.
At year-end, the company had cash and cash equivalents of €14.96 million.
As of Dec. 31, net debt as calculated by Reorg was €303.9 million.
Shareholder Loans
ProXES GmbH was
acquired by mid-market investor Capvis in 2017. The group’s parent company Polyusus Lux X Sarl provided two shareholder loans on the acquisition date, according to its financial
report.
The first shareholder loan totaled €148.9 million and carries an 8% interest rate. The second shareholder loan is €8.5 million in size and carries a 2% interest rate. Both shareholder loans are due to mature on Dec. 31, 2024. About €18 million of the shareholder loans were equitized in 2018.
In April the company received a further €8 million shareholder loan. The loan has a 2% interest rate and also matures on Dec. 31, 2024.
-- Aurelia Seidlhofer, Connor Lovell