RLPC-Astorg considers debt refinance for French OGF as well as sale

LONDON, July 19 Fri Jul 19, 2013 9:10am EDT

LONDON, July 19 (Reuters) - Private equity firm Astorg Partners is considering refinancing debt in its leading French funeral firm OGF and paying itself a dividend as an alternative to a sale process which is still ongoing, banking sources said on Friday.

Astorg is contemplating a dividend recapitalisation, a process that increases a company's debt to allow a payout.

"It is 50:50 whether they sell or do a dividend recapitalisation," one of the bankers said.

Astorg acquired OGF in 2007 from U.S. private equity company Vestar Capital Partners in a 780 million euro ($1.02 billion)buyout backed with 710 million euros of debt, according to Thomson Reuters LPC. Earlier this year it hired Goldman Sachs to run a sale process of OGF, which could fetch between 800 million to 1 billion euros.

The sale attracted a number of potential buyers. Those that made it through to the second round of bidding included Lion Capital, TDR Capital, Pamplona and CVC.

Second round bids were expected by the end of July but have now been pushed back to around August 7, bankers said, adding CVC and Pamplona were likely to submit bids but Lion Capital was not as close to the process. One of the bankers also said that TDR was also no longer as close to the process.

Astorg, Lion Capital, TDR and CVC declined to comment while Pamplona was not immediately available to comment.

Bankers are working on debt packages of around 525 million - 700 million euros to offer to potential buyers to help back a buyout, the equivalent of between 5.25 times and 7 times OGF's approximate 100 million euro earnings before interest, taxes, depreciation and amortisation (EBITDA), bankers added.

Raising the prospect of a debt refinancing instead of a sale could be a way of getting potential buyers to make offers at the higher end of price expectations.

If prices are too low then Astorg is likely to pull the sale, conduct a dividend recapitalisation and wait for market conditions to improve before either bringing the company back for sale or going down an IPO route, bankers said.

OGF, which has more than 5,500 employees, is itself on at least its second private equity buyer. The 170-year-old firm was owned in the latter part of the 1990s by U.S. funerals company Service Corporation International. ($1 = 0.7639 euros) (Editing by Sophie Walker)

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