| LONDON, July 10
LONDON, July 10 Permira is negotiating a
refinancing for its struggling Spanish pizza delivery business
Telepizza that will see a fresh injection of cash from a new
investor to repay junior debt and avoid a costly restructuring,
banking sources said on Thursday.
Private equity firm Permira acquired Telepizza in 2006 for
962 million euros ($1.31 billion) and although the business has
been relatively resilient, it has come under pressure as a
result of broader economic turmoil. It is now looking at ways to
make its 575 million euro debt pile more manageable.
The company's debt comprises 325 million euros of senior
loans, 150 million euros of mezzanine loans and a deeply
subordinated 100 million euro payment-in-kind (PIK).
Permira is in discussions with banks to refinance a new
senior facility that will see existing senior debt repaid at par
and new terms put in place, the banking sources said.
Meanwhile, KKR is in talks with the company to inject fresh
junior capital. It is expected that this new cash will repay
existing mezzanine lenders at par and existing PIK lenders at a
discount, the banking sources said.
The level of discount on the PIK is being negotiated.
Telepizza's PIK was quoted at 18 percent of face value on
Europe's secondary loan market on Thursday, according to Thomson
Reuters LPC data.
"If the PIK lenders ask for too much a deal is unlikely to
happen which could lead to a full blown restructuring where the
PIK could get wiped out altogether and the sponsor gets nothing
either," one of the banking sources said.
KKR has been investing a $3.8 billion special situations
fund to build a portfolio of high risk and high reward assets.
Swiss vending machine business Selecta recently agreed a deal
with KKR to avoid a debt restructuring and allowed owners to
keep a stake in the company.
Permira has been keen to avoid a debt restructuring by
keeping aggressive hedge funds from piling into its debt via the
secondary loan market.
A number of the secondary trades remained unsettled because
Permira held off signing them in order to buy time to agree a
refinancing, traders said previously.
Permira was not immediately available to comment and KKR
declined to comment.
($1 = 0.7331 Euros)
(Editing by Christopher Mangham)