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Oaktree targets Almatis in debt deal with DIC
Move aims to inject capital into company to improve growth prospects.
- By Anousha Sakoui and Martin Arnold, Financial Times
- Published: 23:26 July 3, 2009
London: Oaktree Capital, the US distressed debt investor, has teamed up with Dubai International Capital, the owner of Almatis, in a bid to secure control of the heavily indebted German aluminium company through a restructuring of its debt.
DIC, which acquired Almatis for $1.2 billion (Dh4.4 billion) in November 2007, and the US buyout fund on Wednesday announced they would work together on a restructuring proposal to underwrite a capital injection and cut the company's roughly $1 billion debt load.
The pair said the move would allow the company to "take advantage of current opportunities and to maximise long-term growth prospects."
Sameer Al Ansari, chief executive of Dubai International Capital, said in a statement the move reflected the fund's commitment to Almatis, as well as other DIC-owned companies in its portfolio, and that it did not want to sell the business. Oaktree has been buying up the company's debt and is now one of its largest lenders, putting it and DIC in a position of strength in negotiating a restructuring proposal with the company and its other creditors. Earlier this year it took over UK estate agency Countrywide, after buying up its debt and teaming up with its previous owner Apollo Management, as part of a restructuring.
Almatis' lenders have been in talks with the company and its advisers Close Brothers since it said it would not make a June interest payment on its debt. The company has agreed a standstill arrangement with lenders, which will allow debt restructuring negotiations to run until mid-August.
A marketing process to attract third party interest is in progress, with interest having been expressed from a series of trade buyers and private equity funds, including Blackstone and Advent International, according to people close to the process.
However those people add that the auction will continue and that the proposal is not a fait accompli. Indicative bids are due this week.
An alternative outcome could be that the business is sold to a third party or lenders could take control.
DIC is also in talks with lenders to Doncasters, the UK engineering group it bought for about £700 million from Royal Bank of Scotland in 2006. A person familiar with DIC said the talks were "very early-stage" as Doncasters was still cash flow positive and confident of servicing its debts. A person close to DIC said it had the resources to put more into companies where needed and was determined to keep control and ride out the downturn until valuations improve.
The restructuring talks at Almatis come only weeks after DIC agreed to inject about 25 million euros into Mauser, the German industrial packaging group, to avoid a possible breach of its bank covenants.
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