Candover gets Swissport in the end

The buyout firm has acquired the ground handling business of Swissair Group despite unforeseen delays.

The UK buyout firm Candover has finally been able to complete the management buyout of Swissport, the airport ground handling business of Swissair Group AG.

The deal totalled Sfr580m [E393m], with Candover contributing SFr274m [E185m] in equity finance, plus a senior debt component coming from five banks led by RBS and a mezzanine tranche coming from Intermediate Capital Group. Management are also investing.

Marek Gumienny, a managing director at Candover who will be joining the Swissport board, commented that the deal had originally been set to go through in August 2001 and that a price had been agreed then, subject to due diligence. The terrorist attacks of September 11 in the US and then the collapse of Swissair Group into receivership on October 4 then caused the deal to be put on hold. The Zurich courts then became involved as the creditors of Swissair circled its assets and this obliged Candover to wait on the courts' approval.

Although Gumienny would not specify what impact these events had on the price of the deal, he confirmed that the final figure paid was significantly lower than the one tabled in August.

The MBO includes the existing management of Swissport, led by Joseph In Albon.  He originally joined Swissair in 1984 and has been President and CEO of Swissport since 1997. Swissport is the second largest ground handling agent in the world and operates in 23 countries at 130 airports, servicing over 550 airlines worldwide.  The company currently has 13,000 full time employees.  For the year ended 31 December 2001 Swissport had revenues of CHF1.2bn.

 

Gumienny also said that Candover had to beat off stiff competition from numerous other private equity and trade buyers and was fortunate to have signed an exclusivity agreement with Swissair early on. When asked about the future he said that the aim was to achieve a trade sale or listing for the business in three to five years.

 

Separately, US buyout firm Texas Pacific are said to be the front runners to buy Swissair's inflight food services business, Gate Gourmet, as the Group attempts to liquidate its core assets. Its regional airline business Crossair is also up for sale. Swissair was advised by KPMG Corporate Finance in the Swissport sale.

 

Swissport is the first investment by the Candover 2001 Fund which had a first closing in June 2001 at E1.1bn and is targeting a final close at E2.5bn.