SVP leads listing of Pfleiderer

Strategic Value Partners now owns a 25.9 percent stake in the newly-listed Pfleiderer Group, a manufacturer of wood-based materials headquartered in Poland, three years after leading the restructuring of the group’s debt.

Strategic Value Partners will control a 25.9 percent stake in the recently formed Pfleiderer Group following the listing of the Poland- and German-based furniture material manufacturer. 

SVP has converted its equity position in German parent company Pfleiderer GmbH, acquired through a debt for equity swap in 2012, into a 25.9 percent equity holding in a merged group via the listing last week on the Warsaw Stock Exchange. The deal facilitates a reverse takeover of the German parent. 

The move is the culmination of SVP’s long-running debt-for-equity involvement with the manufacturer. The listing facilitates the merger of the two companies to create the Pfleiderer Group, one of the largest corporates in Poland with annual sales of €1 billion and 3,000 employees.

The market capitalisation of the Pfleiderer Group on its admission to the exchange stood at 1.533 billion zloty (€355.2 million; $384 million). SVP’s stake in the company will stand at 25.9 percent equating to around 397 million zloty (€91.9 million; $99.5 million) post-completion. 

Gross proceeds from the public offering of the company amounting to 362 million zloty will be used to finance the acquisition of the parent company Pfleiderer GmbH and €11 million-€12 million will be used to reduce the indebtedness of the enlarged group. 

SVP purchased roughly 10.5 million new and existing shares in the company and is expected to receive another 6 million in existing shares from Atlantik, a Luxembourg-based investment company established as part of the financial restructuring of Pfleiderer in 2012, as proceeds of a payment-in-kind facility. Stakeholders in Atlantik include SVP, Commerzbank and KfW, lenders to Pfleiderer prior to the 2012 restructuring.

The latest transaction is expected to complete by mid- to late January 2016. Following that, Atlantik’s stake in the overall group will stand at 25.3 percent stake. Atlantik previously held 65 percent of the Grajewo subsidiary, in addition to its position in parent company Pfleiderer GmbH. 

SVP declined to comment on the size of its investment. In a statement announcing the listing, Victor Khosla, founder and chief investment officer of SVPGlobal, said: “Since our investment the management team of Pfleiderer Group has successfully repositioned the group and unlocked further potential by integrating Pfleiderer GmbH and Pfleiderer Grajewo, which is already paying off in growing synergies. We look forward to supporting its continued growth.”

By the end of 2018, the full integration of Pfleiderer Grajewo and Pfeiderer is targeted to result in synergies of up to €30 million per year. The management board of Pfleiderer Grajewo intends to recommend a dividend for the year ended 31 December 2015 amounting to 1-1.25 zloty per share. 

Pfleiderer Grajewo is among the largest producers of furniture boards, kitchen worktops and artificial veneers in Poland. The manufacturer, with origins dating back to 1894, is a leader in European wood-based products. The company was split into two units: core west and core east. The restructuring aims to rectify an imbalance in debt outstanding between the two units, Moody’s commented in June. Target leverage of the combined entity is projected to be below 2x net financial debt / adjusted EBITDA by the end of the year.

“Based on the positive feedback by investors and encouraging indications of demand we have decided to resume our plans of fully integrating Pfleiderer Grajewo S.A. and Pfleiderer GmbH by way of a reverse takeover,” said Michael Wolff, chief executive of Pfleiderer Group. “We are convinced that the transaction will successfully create the basis for our ultimate goal – creating ‘One Pfleiderer’.”

Prior to a financial restructuring in 2012, JP Morgan’s private equity arm, One Equity Partners, held 23 percent of Pfleiderer. Its holding was subsequently diluted.

This story was amended on 9 December to clarify that the debt for equity swap happened as part of the 2012 restructuring.