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Sale of UK's IMO Car Wash to close Friday -sources
May 29, 2009 / 2:22 PM / 8 years ago

Sale of UK's IMO Car Wash to close Friday -sources

LONDON, May 28 (Reuters) - An auction to sell British car cleaning firm IMO Car Wash [CRLYWA.UL] closes on Friday, two sources with knowledge of the situation said, with lenders pushing for a deal as they seek to minimise losses.

The heavily indebted company was put up for sale earlier this year after lenders sought a better restructuring proposal than offered by its current owner, private equity firm Carlyle Group [CYL.UL], the sources said.

IMO’s sales have flagged over the last year putting pressure on its debt covenants, prompting its owner and lenders to seek a restructuring.

Such a deal would be likely to include a combination of a debt for equity swap, a cut in the overall debt load and an injection of new capital into the company, the sources said.

Lenders to the company include Lloyds Banking Group (LLOY.L) unit Bank of Scotland, which arranged the 350 million pound ($561.2 million) loan package backing Carlyle’s leveraged buyout of the group in March 2006.

The auction of the firm has been extended by two weeks, one of the sources said, which may suggest strong buyer interest, possibly from other private equity houses.

The auction has been run by bankers at Rothschild [ROT.UL], the sources said.

Rothschild, Carlyle Group and IMO Car Wash all declined to comment.

If no buyer emerges from the auction, or the offer is seen as too low, lenders may push to take over the company themselves, using offers made in the auction as a basis for a restructuring deal.

Some lenders to IMO have bought into the company’s debt over the last year, one source said, with an eye on a restructuring deal in the future.

Such a “loan to own” strategy is becoming increasingly common in Europe as distressed debt investors scoop up heavily discounted loans and bonds, expecting either high returns or a stake in the company. (Editing by Douwe Miedema and David Holmes) ($1=.6236 Pound)

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