April 10, 2014 / 10:21 AM / in 4 years

Toyota Tsusho buys stake in Germany's Scholz AG

FRANKFURT, April 10 (Reuters) - Japan’s Toyota Tsusho is acquiring a 39.9 percent stake in loss-making Scholz AG, part of efforts to put the German metals recycling group’s finances back on a solid footing.

Toyota Tsusho, part of the Toyota group, said in a statement on Thursday the transaction is expected to close in the second quarter after final negotiations with Scholz’s existing lenders.

Scholz, burdened by 1.1 billion euros ($1.5 billion) of debt at the end of 2013, has been hit by weak metal and scrap markets. It has embarked on a restructuring after a period of rapid expansion and is selling smaller non-core operations and shutting some sites.

Toyota Tsusho declined to specify how much it paid Scholz’s family owners for the stake.

Toyota Tsusho - which prevailed against rival bids from a Chinese group and buyout group KKR - will also inject fresh equity into Scholz, according to a person familiar with the transaction.

A separate sales process for Scholz’s aluminium and engineering steel businesses is planned to be concluded this quarter as the group seeks to reduce its debt to 700 million euros, the source added.

Most of Scholz’s debt is in bank loans, some of which have been bought up by private equity and hedge funds such as Davidson Kempner, SVP and TPG.

Scholz booked a post-tax loss of 314 million euros in 2013 on revenues of 3.5 billion euros, weighed down by charges relating to the restructuring. Earnings before interest, tax, depreciation and amortisation stood at 125 million euros. ($1 = 0.7234 Euros) (Reporting by Arno Schuetze; Editing by Maria Sheahan and Jane Merriman)

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