RLPC-Elior sale delayed for U.S. acquisition

Thu Mar 14, 2013 1:48pm EDT

* Elior eyes U.S. catering business

* Sale of Elior still on the cards after acquisition

* Lenders approached to waive covenants to facilitate Elior buyout

By Claire Ruckin

LONDON, March 14 (Reuters) - The sale of French Catering company Elior, which could fetch up to four billion euros ($5.18 billion), has been delayed while it seeks to make an acquisition, banking sources said on Thursday.

Owner Charterhouse Capital Partners decided to sell Elior, either in part or in whole, in November, and hired Credit Agricole, HSBC and Rothschild to manage the process.

The sale has now been delayed for a few months while the company attempts to acquire a contract catering business in the U.S., bankers said, without giving further detail.

Charterhouse declined to comment. It bought Elior for 2.5 billion euros in 2006. The private equity firm owns 62.3 percent, Elior's co-founder Robert Zolade has 24.7 percent and Chequers Capital 7.8 percent. The remaining 5.2 percent is owned by other investors.

Elior's business includes a contract unit which provides catering to businesses, schools and hospitals and accounts for around two thirds of the firm's overall business, and a concessions business which serves airports, railways and motorways.

Elior's sale had attracted early interest from buyout firms BC Partners and CVC Capital Partners which could team up to make a joint bid. Blackstone and Clayton, Dubilier and Rice had also considered bidding. A buyout of Elior would require about two billion euros of debt.

Elior is asking existing lenders to waive a change of control clause to allow the sale to proceed, bankers added.

Usually when new owners take over a business a change of control clause triggers any existing debt to be repaid at par. If the change of control clause is set aside then the existing debt can remain in place, giving potential buyers confidence that the business will have sufficient funds.

It is unusual to try and waive a change of control clause but necessary in this case as many of the loan investors could have passed their reinvestment periods by the time Elior is brought to market again.

The waiver will also ask existing lenders to extend a portion of the debt for two years until 2019 and give permission for Elior to raise high-yield bonds which would be used to repay lenders that do not extend debt, a portion estimated to total around 300-500 million euros,bankers said.

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