Kohlberg Kravis Roberts will invest A$90 million (€66.5 million; $96.5 million) in metal recycling group CMA as part of the distressed Australian company's plans to restructure its operations, a source confirmed to PE Asia.
The US firm, through its subsidiary KKR Asset Management (KAM), had become the largest holder of the company’s syndicated facility agreement in March after paying $81.9 million to acquire more than 66.6 percent of its debt. The syndicated facility amounts to about A$120 million in total, a company statement said. ANZ Bank is the agent for the facility.
The recapitalisation will go on to raise much needed equity of approximately $30 million for CMA, provide $10 million working capital facility as part of the debt restructure, extend the term of CMA's facilities, enable some repayment of existing borrowings and provide debt forgiveness of around $17 million.
CMA voluntarily suspended trading of its shares on the Australian Stock Exchange (ASX) in February 2010 while undertaking a capital structure review. KAM’s investment is part of the restructuring proposal announced by CMA and is subject to approval by CMA’s shareholders, according to a company statement. If approved, the restructuring would position CMA for renewed growth and enable the company to recommence trading on the ASX in July while nominees of KAM could acquire up to 85.5 percent of CMA shares, the statement added.
CMA recorded a net loss of A$72.7 million for the fiscal year ended June 2009, according to a disclosure to the ASX. “The result was impacted by extremely challenging conditions in the scrap metal industry tight credit markets, falling global demand for scrap material and dramatic pricing declines of commodities in a relatively short timeframe,” it said.
The company is one of several distressed Australian businesses with linkages to private equity to have made the news in recent times.
Most recently, it was reported that CVC Asia Pacific-backed diagnostic imaging business I-Med would submit a proposal to its creditors in a bid to alleviate mounting pressure to repay over A$1.2 billion in senior and subordinate debt.