* Carlyle may lose control of car-washing firm IMO
* Senior lenders propose debt deal that needs court approval
* Junior lenders fight offer that gives them only warrants
By Tom Freke
LONDON, June 19 The fate of Europe's biggest
car-cleaning company, IMO Car Wash [CRLYWA.UL], may be decided
in the courts, two sources with knowledge of the situation said,
as lenders battle over terms of a debt-for-equity deal.
Junior lenders, owed up to 90 million pounds ($147.2
million), are fighting a proposed restructuring deal that sees
their debts written off, left only with warrants to be used in
the case of a stock sale or flotation, and a share in the
company's future profits.
IMO's senior lenders have proposed a debt-for-equity swap
where they would seize control of the company from present owner
Carlyle Group [CYL.UL] in exchange for a big cut in the value of
The senior creditors, owed more than 200 million pounds,
have suggested a scheme of arrangement deal that would need to
be approved by the courts.
IMO's lenders include Lloyds Banking Group (LLOY.L) unit
Bank of Scotland, arranger of the 350 million pound loan package
backing Carlyle's leveraged buyout of the group in March 2006.
Following a failed sales process in May, senior lenders
believe the value of IMO, which operates in 13 countries across
Europe, is now less than the amount it owes them, meaning they
have control of the company's future, one of the sources said.
This means junior debtholders have no economic interest left
in the company, the source added.
Carlyle Group could not be reached for comment. IMO Car Wash
declined to comment.
The senior lenders believe the sale process, and an earlier
restructuring bid from present owner Carlyle Group, has
established a defendable market price for the company, despite
the objections from junior lenders.
But junior creditors are willing to challenge the senior
lenders' valuation of the company in the courts, the source
said, as they believe the value of the company is higher than
that suggested by the senior lenders.
Establishing agreed valuations for companies is very
difficult in the present market because of a lack of buyers and
credit, market experts say.
"Valuations are depressed, debt multiplies are down and it
is not clear how much of a distressed discount to apply," said
Gareth Davies, a restructuring expert at Close Brothers.
"Given the uncertainty, many people don't really want to
know how the valuation process will work out," he said.
"There aren't many buyers out there so even doing a sales
process is not necessarily proof of a value -- it is still a
very subjective process," Davies added.
(Editing by Rupert Winchester)