Sponsor Ardian is working with Marlborough Partners’ debt advisory team on an amend-and-extend request for German lighting fixtures company SLV Lighting, whose €400 million term loan B paying Euribor+425 bps matures at the end of 2023, sources told Reorg. The group has been underperforming and several pieces of the loans have come up for sale recently as lenders worry about getting stuck in the debt, sources said.
SLV was a cash-generative business historically, and has paid down some of the loan as a result. But earnings have largely gone sideways since its 2016 buyout by Ardian, despite some bolt-on acquisitions in Italy and Switzerland, hovering around the €60 million EBITDA level. That figure includes significant adjustments, with reported cash EBITDA having slipped to the €40 million level on a last-12-months’ basis as of July, sources said.
The group’s breakeven level is about €50 million EBITDA and its adjustments seem to be perennial, which means it is likely no longer generating any cash, sources noted. The group still has a reasonable amount of liquidity, with roughly €16.8 million cash left as of July, while its €50 million RCF was €5.6 million drawn, they added.
The revolver is subject to an 8.46x springing net leverage test. SLV was 6.3x net levered as of July, however headroom could quickly shrink given the recessionary outlook and the fact that the group imports almost all of its products from Asia, which means margins could come under further pressure, sources cautioned.
That has caused some lenders to try to offload some of their exposure with several smaller blocks and one €15 million piece of the loans offered to the market recently. But with the loans still quoted in the low 80s little if any of the debt has traded, sources said.
As a result, Ardian will likely need to inject some equity into the business to reduce leverage and facilitate an A&E. The sponsor may offer to fund some M&A in exchange for an extension, but could also look to retranche the debt into senior and junior tranches, sources suggested.
BC Partners-owned global resin-based consumer goods producer Keter recently launched an
A&E request to term out its €1.2 billion term loan by two years, which features a new €200 million second lien piece and €50 million of equity to prepay €250 million of the first lien debt.
Ardian declined to comment.
–Aurelia Seidlhofer, Robert Schach