* Culligan says has support for debt restructuring
* Centerbridge to swap debt for equity, put up cash-sources
* Culligan to issue $355 million in new debt-sources
By Caroline Humer
NEW YORK, June 5 Private equity firm
Centerbridge Partners is close to a deal to buy water filtration
company Culligan International Co. through an out-of-court debt
restructuring, a move that will allow the water filtration
company to avoid bankruptcy, according to people involved in the
Culligan, which is owned by Clayton, Dubilier & Rice, has
been unable to renew its more than $700 million in debt,
according to these people, who were not authorized to speak
publicly. Some of the debt is related to a $375 million special
dividend paid in 2007 to equity holders.
Centerbridge will put up about $90 million in cash and swap
debt for equity in return for most of the company's stock, the
sources said. Culligan will use $100 million of its cash to pay
down debt, the sources said, leaving the new company with about
$355 million in debt plus a revolver loan.
Culligan, known for its advertisements starting in the 1950s
that featured a cartoon housewife beckoning "Hey Culligan man!",
hired restructuring advisers earlier this year and was
considering options including bankruptcy or a sale, sources told
Reuters in March.
The Rosemont, Illinois-based company said it has already
received nearly 100 percent support from its holders of first
and second-lien debt for the restructuring.
"We are working to conclude the restructuring, which will
substantially strengthen our balance sheet and position Culligan
well for the future," a Culligan spokeswoman said in an e-mailed
statement. "We look forward to working with Centerbridge
Partners as we continue to strengthen and grow the Culligan
business for years to come."
Centerbridge declined to comment.
A Clayton Dubilier spokesman said by email that there is
"good progress toward a favorable, negotiated sale of the
company." Clayton Dubilier bought the company in 2004 from
France's Veolia for $610 million, including $200
million in equity.
Culligan's new debt will be owned in part by Centerbridge
and Angelo Gordon, the sources said. Angelo Gordon was not
immediately available for comment.
Responses to the restructuring proposal are due on June 8,
and the deal would be able to close afterward, the debt
restructuring sources said. Culligan also proposed a prepackaged
bankruptcy, they said.
Terms of the deal were made public in a $575 million lawsuit
filed last week in New York state Supreme Court in Manhattan by
a group of Culligan dealerships suing over the 2007
recapitalization and restructuring.
The dealers, who are shareholders in the company, will have
their stake in Culligan cut to 0.16 percent from 7.5 percent
with the restructuring, the lawsuit sad. They say that the
company's recapitalization put too much debt on the company and
"left Culligan in financial ruin."
Clayton Dubilier, Centerbridge and Culligan declined to
comment on the lawsuit.