June 27, 2014 / 1:25 PM / in 4 years

Car Wash LBO bond expected soon

LONDON, June 27 (IFR) - TDR Capital will launch a high-yield bond backing its buyout of IMO Car Wash, according to market sources, the company’s first public debt deal since its landmark restructuring five years ago.

JP Morgan is leading the deal, according to one of the sources. An investor said that JP Morgan is arranging a high-yield investor meeting on Monday, and that this deal is in the same sector - UK and EU services.

The group is the largest dedicated car wash company in the world, according to its website, with over 330 sites in Germany, 300 in the UK and over 300 sites throughout the rest of Europe and Australia.

The business has GBP180m of debt under its current capital structure, according to a banker close to the deal, split between first and second lien tranches. Debt was reduced in a landmark restructuring in 2009, which was the first scheme of arrangement for an LBO to be challenged in the English courts.

“Chase Capital sold the business to Carlyle in 2005, who put 8x debt to Ebitda on it, arguing it was quasi-infrastructure,” said the banker.

“The restructuring came a few years later and, as is often the case, it stemmed from the unwise capital structure rather than the underlying business.”

The restructuring saw mezzanine lenders in IMO wiped out, after a judge came down on the side of valuations present by senior lenders.

“It was a landmark case, as the judge argued that the value of a business is what someone is willing to pay for it,” said a bond investor.

“I remember the credit from my days in the loan market; it never hit its numbers, and always blamed the weather one way or another.”

A spokesperson for TDR Capital said that they had no official comment on the matter. (Reporting by Robert Smith; editing by Helene Durand and Alex Chambers.)

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