LPC-Charterhouse revises financial restructuring plan for Bartec

By Hannah Brenton and Sandrine Bradley

(Reuters) - British private equity firm Charterhouse has proposed a revised debt restructuring plan for its struggling German oil and gas safety tools producer Bartec after the initial plan was rejected by lenders, two sources familiar with the matter said.

Charterhouse-owned Bartec, which has been hit by the slump in oil prices and is seeking to diversify, has around €384m (265 million pounds) of outstanding debt, including a €260m term loan.

Charterhouse has increased its capital commitment to €40m from €20m in the new restructuring plan. It also increased the margin on offer and proposed a new forward looking liquidity covenant.

In addition to €20m of equity that would be available from day one and was in the original plan, Charterhouse will now also commit €10m of a €30m accordion facility, and up to €10m of equity is also available if a put option is exercised by a group of minority shareholders and the company would breach its covenants if it funded the put option itself.

In the new plan, the PIK margin has been increased to 225bp over Euribor, up from an originally proposed 200bp, if leverage is above six times. This drops to 175bp if leverage is below that level. In addition, the consent fee of 50bp will now be paid in cash instead of payment-in-kind notes.

In return, Charterhouse wants lenders to agree to a covenant waiver that requires the business to maintain net debt at less than six times. It also wants to extend debt maturities by more than two years, to at least 2021.

The removal of covenants, particularly leverage, and the size of the equity cheque remain the main points of contention for lenders, one of the sources said.

“I think there will be some push back from lenders,” he said.

An all lender call is expected to take place within the next 24 hours to discuss the revised plan, according to a second source.

A small group of around 20%-30% of the company’s lenders – including Ares, Partners and Idinvest – attempted to form a steering committee but failed to secure enough support. This group, which is being advised by law firm Kirkland & Ellis, has now formed an unofficial ad hoc committee.

The wider lender group is in the process of mandating a financial adviser – Houlihan Lokey, Macquarie and Deloitte are in the running. It is not clear if lenders will attempt to form a steering committee once the adviser has been appointed.

“Once the revised plan has been discussed some sort of co-ordinated response will be put to Charterhouse,” said the second source.

This will be done either through the informal ad hoc committee or through the agent Commerzbank, he said.

Bartec’s €260m term loan was bid at 80% of face value in the European secondary market on Monday, according to Thomson Reuters LPC data.

Charterhouse declined to comment.

(Editing by Christopher Mangham)