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Lenders to German plastics manufacturer Kloeckner Pentaplast have been asked to sign up to a restructuring agreement providing €420m of debtor-in-possession (DIP) and haircut around 68% of first lien debt, according to 9fin sources.
Creditors are set to take over the company from sponsor Strategic Value Partners (SVP) under a Chapter 11 process, as 9fin previously reported. The DIP, split between euros and dollars, is due to fund the Chapter 11 proceedings, sources said.
The DIP financing includes funds to refinance the existing €112m bridge loan raised at the end of August, with the new money component being less than €300m, sources added.
As part of the agreement, €550m of first lien debt will be rolled up, with the remainder being equitised. Some equity will later be diluted via a Management Incentive Plan.
The existing bridge loan is pari passu with senior debt, but has some additional unencumbered assets pledged against it, sources said.
Kloeckner has €2bn of secured debt, €1.6bn of which is due in 2026. The full capital structure is here.
SVP proposed an A&E including €275m of new funding in July this year, but creditors rejected the deal. The subsequent revelation of a circa €300m to €400m liquidity hole then prompted the renegotiation of the terms.
The sponsor injected €150m around 18 months ago to support the company.
The SteerCo of secured creditors includes Redwood, Nuveen, Neuberger Berman, and Alcentra, as 9fin reported. The majority of senior debt holders signed up to a co-op agreement, which was initially set up back in April and has been extended until the debt matures next year.
Gibson Dunn, Hengeler Mueller, and Houlihan Lokey are advising the group of secured creditors. Kirkland & Ellis and PJT are advising the company, as 9fin reported.
A holder of Kloeckner’s 2L €300m notes recently hired Akin Gump, 9fin reported.
SVP declined to comment. Kloeckner Pentaplast did not respond to a request for comment.
