FRANKFURT Oct 9 Private equity group KKR
has launched a new attempt to find a buyer for
loss-making car repair chain Auto-Teile Unger (ATU),
a household name in Germany, in a bid to draw a line under an
ill-fated investment, sources said.
Potential bids will need to compete against a proposal from
ATU's creditors, which are offering to swap some of the
company's debt of around 600 million euros for equity, two
sources familiar with the transaction told Reuters on Wednesday.
"KKR is running a dual track and will likely decide before
the end of the year whether it will opt for the credit bid or
for the third-party bid," one of the sources said.
The private equity investor itself is unwilling to supply
further equity, the source added. Restructuring experts have
said in the past that ATU needs at least 100 million euros in
Lazard has been asked to screen the market for buyers, the
sources said. An earlier auction had not produced any result.
ATU is suffering from weak customer demand as European car
markets hit 20-year lows. Separately, online shops for car parts
- like Delticom - are eating into its business.
KKR bought ATU from private equity peer Doughty Hanson for
1.45 billion euros ($2 billion) in 2004. It injected roughly 140
million euros of equity into it in 2008 to save its investment.
A large part of the purchase price was financed through
debt, which was loaded onto ATU's books. In 2010, 450 million
euros in senior debt was refinanced with secured notes maturing
next year. Separately, mezzanine and second lien loans were
refinanced with 143 million euros in floating rate notes (FRN).
Earlier this year, KKR entered talks with credit investment
firm Centerbridge, which has bought a substantial portion of
ATU's bonds, as well as with other creditors. The negotiations
are focusing on a plan that includes swapping part of the
company's debt for equity.
ATU's earnings before interest, taxes, depreciation and
amortization (EBITDA) dropped to 62 million euros from 103
million in its fiscal year 2012/2013, which runs until the end
of June. It posted a net loss for the period.
In August, ATU said it would present a restructuring plan by
Rating agency Moody's recently downgraded ATU to Caa3 from
Caa2, citing an increased refinancing risk for the outstanding
bonds, which are due between May and October 2014.
ATU, KKR and Lazard declined to comment.