Rhiag pulls high yield bond after Apax agrees buyout
LONDON, Oct 9 (IFR) - Italian distributor of spare car parts Rhiag has pulled its planned EUR350m high-yield bond, after private equity group Apax Partners agreed to buy the company.
Apax has confirmed that it has entered into a definitive agreement for Apax Funds to acquire Rhiag-Inter Auto Parts Italia S.p.A., and that BNP Paribas and Credit Suisse will provide financing.
Alpha Private Equity owns 72% of the Rhiag's equity at present, with AlpInvest owning 24%. The pair were reported to be selling the business to Apax in April this year, but the deal did not materialise.
"Apax looked at the business earlier, but the two sides could not agree a deal," said a high yield banker.
"It's odd that Apax finally got there once a PIK is being marketed."
Rhiag had begun marketing a EUR195m 7NC3 senior secured tranche and a EUR155m 7NC1.5 PIK toggle issue, with Goldman Sachs, JP Morgan and Mediobanca as joint global co-ordinators.
The bond's covenants contained a strong indication that Rhiag's owners were still looking to sell the company, as it included a portability clause, which allow bonds to stay in place in the event of a sale under certain conditions.
The senior secured bond had a portability clause that allowed a sale of the company within 18-months of issue, if the senior secured issuer had net leverage below 2.5x Ebitda.
The PIK toggle issue did not have a portability clause, and was being used to fund a EUR147m dividend to Rhiag's private equity owners.
PIK toggles have been popular in the European high yield market this year, and have mainly been used to fund dividend distributions to shareholders unable to realise alternative exits on their investments.
Market sources said that Apax is buying out Rhiag at roughly 7.5x its EUR76.5m Ebitda. Rhiag has conservative leverage at present, standing at 2.4x at the end of last year.
The bond issue would have left Rhiag with 2.4x pro forma leverage at the senior secured level, and 4.4x through the PIK toggle. (Reporting by Robert Smith, additional reporting by Claire Ruckin, editing by Alex Chambers)
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