CD&R in talks with Hagemeyer

The Dutch distribution business has confirmed that it is holding talks with Clayton, Dubilier & Rice over ways of refinancing the debt-laden business.

Clayton, Dublier & Rice (CDR), the US private equity firm with European offices in London, has entered talks with Dutch distribution company Hagemeyer NV as part of the company’s plans to sort out its debt difficulties.

 

Hagemeyer, the electrical and safety equipment distributor, confirmed that the company was in “advanced stages of negotiation” regarding refinancing alternatives, “possibly including a third party investment.” The statement was issued in response to a report in Dutch daily newspaper Het Financieele Dagblad, which revealed that talks were being held with CD&R, which was unavailable for comment.

 

In its most recent financial statement, published earlier this week, Hagemeyer said that net debt amounted to E973m at the end of September, an increase of E77m on the figure at the end of June. In the first half of 2003, Hagemeyer reported sales of E3.4bn, down from E4.1bn in the same period in 2002. The company also reported a first half net loss of E129m.

 

Hagemeyer is interested in selling a stake in the business in order to avoid a dilutive rights issue, Reuters reports. Hagemeyer’s share price jumped ten per cent to E2.53 following the confirmation of talks, although in mid-morning trading the shares were trading at E2.49. This compares with a one-year high of E8.79.

 

Hagemeyer has suffered from weak markets, particularly in the UK and Germany, which have resulted in profit warnings and substantial job cuts. Commenting on the company’s trading update earlier this week, Hagemeyer CEO Rob ter Haar said that uncertainty over the company’s future had also impacted on performance.

 

This week, the company confirmed that it had entered into a standstill agreement with most of its lenders which “allows for the continuation of the existing credit lines and waives certain defaults which have occurred in various credit facilities. The agreement provides access by the company to liquidity to support normal working capital and trade credit.”

 

Hagemeyer said that other options to raise capital include a rights issue for several hundred of millions of euros.