Deals of the Year 2011: Crest Nicholson
|£509 million refinancing and debt-for-equity swap
|return to the Global Deals of the Year index
The troubles faced by Europe’s banking sector in 2011 will inevitably translate into increased corporate distress in 2012 and there is a pressing need for banks to deal with many assets sitting on their balance sheets. Minneapolis-based distressed debt fund Värde’s takeover of UK house builder Crest Nicholson last year could be a sign of things to come. Crest Nicholson, which was taken private in 2007 when it was bought by HBOS and West Coast Capital, had already completed a debt restructuring in 2009 but still had £509 million ($799 million) of debt on the balance sheet. It had a debt to ebitda ratio of 10.2 times and net debt to ebitda of 8.2 times. The firm was symptomatic of what is likely to be a growing trend over the next couple of years – sticking-plaster restructurings that prove insufficient as the global downturn persists.
The UK firm’s debt was held by a bank-dominated syndicate when the US fund, advised by Lazard, decided to build a blocking minority position.