Alstom launches sale of heat exchanger unit - sources

Mon Jan 13, 2014 10:58am EST

FRANKFURT/LONDON Jan 13 (Reuters) - French turbine and train maker Alstom is set to receive tentative bids this week for its heat exchanger business in a potential 600 million-euro ($820 million) deal, three people familiar with the process said.

Private equity firms such as PAI, Rhone, Pamplona, Triton, Bain and Advent are likely to hand in offers by a Jan. 15 deadline, the people said, adding that more than 50 investors initially received information packages from Goldman Sachs, which is organising the auction.

Alstom, which makes high-speed TGV trains, announced sweeping job cuts in November and said it would sell up to 2 billion euros of assets to raise cash after a tough first half of the year.

One of the assets put up for sale is the heat exchangers business that comprises Air Preheaters unit, making products used by boiler companies and utilities, as well as the Gas-Gas Heater unit that makes devices salvaging heat from the flue gas from power plants before it exits through the stack.

The units, with combined sales of some 500 million euros, are based in the German cities of Mannheim and Duesseldorf.

Private equity groups are likely to offer to pay 520-650 million euros or about eight to 10 times their earnings before interest, taxes, depreciation and amortisation of roughly 65 million euros, the sources said.

Bankers are working on debt financing packages to back a sale of Alstrom, banking sources said.

Debt could total around 422.5 million euros, denominated in euros or dollars, or 6.5 times Alstrom's EBITDA, one of the bankers added.

Separately, several buyout groups are preparing to bid for a heat exchanger unit that German-based GEA has put on the block and is likely to fetch about 1.2-1.3 billion euros.

Bids for that unit are due on Jan. 27. Private equity groups including Bain, Onex, First Reserve, Rhone, Permira, Blackstone, Clayton Dubilier & Rice, Carlyle and Advent are expected to hand in tentative offers.

"None of the buyout groups are looking to combine the two heat exchanger units as they are quite different," one banker familiar with the transaction said. He added that at the same time, several private equity firms will look at both assets in the beginning and then decide to just work on one.

Alstom, Goldman Sachs, GEA and the private equity groups declined to comment. Onex, Rhone and Pamplona were not immediately available for comment.

($1 = 0.7314 euros) (Additional reporting By Claire Ruckin, editing by David Evans)

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