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Capital Markets

Restructuring: Lenders rediscover their defensive side

Debtholders pushing back; Sponsors frustrated in restructuring plans

More on debt buybacks

When a group of activist funds including Apollo Management, TowerBrook Capital and York Capital approached French roofing business Monier in April with a restructuring proposal, it came as a surprise to more than the troubled company itself. This was not business as usual in the struggling European corporate sector – this was different. Sponsor-led restructurings have been the hallmark of this downturn so far, with private equity firms taking advantage of disarray at the lending banks to increase their control at firms in distress. But the situation at Monier is being interpreted by many as a sign that lenders are beginning to protect themselves and push back against sponsor-led solutions.

Monier Group is owned by France’s largest private equity firm, Paribas Affaires Industrielles (PAI). It is facing an interest payment on €2.29 billion of debt on June 30, and is therefore under intense pressure to come up with a solution that could avoid default. PAI itself put forward a debt-for-equity offer in mid-May whereby it proposed to inject €125 million in return for a 73% stake and lenders writing off two-thirds of their debt. It is the lenders’ rejection of this scheme that has made the market sit up and take notice.

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