RLPC-Goldman Sachs cuts Bavaria Yachtbau debt price

By Elena Moya and Tessa Walsh

LONDON, Aug 14 (Reuters) - Goldman Sachs (GS.N) has cut the price of its covenant lite loan to German yacht maker Bavaria Yachtbau GmbH in the secondary loan market in a renewed effort to sell the paper as banks around the world come under pressure to clean their books, banking sources said on Thursday.

Loan traders told Reuters LPC on Thursday that Goldman Sachs, which is reporting on Aug. 19, had offered the senior debt at 30 percent of face value last week, but found few takers.

The company's deeply subordinated payment-in-kind (PIK) loan was said to have been offered at 5 percent of face value, traders said.

Goldman Sachs and Dresdner Kleinwort underwrote a 875 million euro financing package backing the 1.3 billion euro purchase of the company by private equity firm Bain Capital in June 2007 before the credit crunch, RLPC data shows.

The aggressive loan had high leverage of nearly ten times total debt to EBITDA and was structured with senior debt, second lien, PIK and mezzanine loans.

The deal was part of the 75-80 billion euro pipeline of aggressively priced and structured leveraged loans that were unable to be sold and left on banks balance sheets as the credit crisis intensified.

Banks have been forced to discount the paper to sell it and Bavaria was one of Europe's first discounted loan sales in March.

Goldman, which owns most of the junior debt, tried to sell the senior debt at 65 percent of face value and sold around 100 million euros of its position at that time, banking sources said. The loan was quoted recently at 50 percent of face value, according to RLPC data.

Dresdner, which owns half of the senior and second lien debt, opted not to sell and has not been a recent seller.

"Now, they're (Goldman) are desperately trying to sell it," one of the sources said.

Goldman Sachs declined to comment.

Bavaria has struggled as consumers have cut down on luxury purchases such as yachts. The highly leveraged company has underperformed its business plan but traders said that the secondary loan price also reflects Goldman's desire to sell.

"There is recovery value in there - 30 is pretty harsh, Bain is a reasonable sponsor. They overpaid and overlevered the business and the equity is underwater but Bain is an experienced sponsor," a secondary loan trader said.

Bavaria's overall debt facility initially included 650 million euros of senior debt, 157 million of mezzanine and 85 million of PIK notes, one of the sources said. (Editing by Toby Chopra)