News & Analysis

Oaktree, Anchorage to steer Bavaria Yachtbau

The lenders will anchor the German yacht maker with a €55m investment and write down most of its debt. Bain bought Bavaria for €1.3bn in July 2007.

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Bain Capital has lost control of its first yacht investment.

Oaktree Capital Management and Anchorage Capital will now pilot Bavaria Yachtbau, the yacht maker purchased by Bain in July 2007.

The two special situations-focused private equity firms have been lenders for more than a year to the German company, having purchased a total of roughly €900 million in debt related to Bain’s LBO.

Oaktree and Anchorage said in a statement they now control about 95 percent of Bavaria’s €960 million in debt. Both firms specialise in acquiring distressed debt with the aim to later take control of a company.

It is unclear if Bain has lost all of its equity investment, a reported €400 million, which formed part of the €1.3 billion deal agreed before the credit and financial crisis took hold.

Bavaria: Sailing away from Bain

Oaktree and Anchorage have been “working collaboratively” with Bain on restructuring Bavaria, which will have more than 90 percent of its senior and junior debt written down. The two firms will also inject €55 million into Bavaria to further bolster its balance sheet.

“The strengthened capital structure will enable us to continue to develop the core European business while also targeting new markets with an exciting new product range,” said Oren Peleg, a London-based managing director at Oaktree.

Lazard and Latham & Watkins counseled Bavaria on the restructuring.

Several private equity firms have seen their investments in yacht makers sink this year.

In May, Australian boat builder The Riviera Group, backed by Australian private equity firms Gresham Private Equity and Ironbridge, entered into voluntary receivership.

Meanwhile, UK private equity firm Candover wrote off the entire value of its 50.2 percent equity stake in Ferretti, an Italian yacht maker, in February. Candover and fellow London-based firm Permira, which held a 10 percent stake in the company, were not involved in Ferretti’s restructuring plans, which saw its lenders-turned-owners halve Ferretti’s debt to about €550 million.