HIG turns to GSO for €340m financing for HCS – exclusive

HIG has tapped GSO for a €340m financing package to refinance the existing debts of HCS Group, a portfolio company acquired in 2011 that the firm has decided to hold onto.

Private equity firm HIG Capital has turned to GSO Capital Partners for a €340 million unitranche package to refinance the existing debt of its portfolio company HCS Group after its attempt to sell the company through an auction process did not attract what it saw as the right price.

A source familiar with the situation told PDI that the private equity group felt that the “solid growth potential of the company was not reflected in the bids” HIG received for the chemical company it acquired in 2011. The process was reported to have ended in the summer.

Among the private equity firms that put forward a bid for HCS were Bain, Triton and Bridgepoint.

“The firm decided to keep the company as it is convinced of its growth potential,” the source added. The source declined to go into the details of the structure of the debt facility itself.

Both HIG and GSO declined to comment on the transaction.

In addition to GSO’s backing, German banks Commerzbank and NIBC Deutschland have committed to a €50 million revolving credit facility.

HCS manufactures hydrocarbon specialty products and is headquartered in Frankfurt. It generates annual revenues of about €500 million.

HIG acquired German Haltermann in 2011 from the Dow Chemical Company. Two years later, the firm completed the acquisition of Petrochem Carless Holdings, a producer of hydrocarbon chemicals based in UK and merged the two companies to form the HCS Group (Haltermann Carless Specialties).

GSO’s €340 million financing package is the latest sizeable deal underwritten by the investment firm. Earlier this year, the firm provided a €625 million unitranche facility to support the merger between Italian and US plastics companies Polynt and Reichhold.

GSO also completed the final close of its third mezzanine fund after raising $6.5 billion in capital commitments. It is the third incarnation of the vehicle, which targets investments in the US and Europe.