Restructuring office

Issue

Deceuninck is an international designer and manufacturer of PVC systems and composites for the construction sector. Consolidated sales amounted to 506 mio EUR in 2009.

The group has recently expanded its operations outside the Benelux region largely through acquisitions. The last major acquisition was mostly funded by debt, significantly increasing the group’s level of gearing.

As a result of the financial and economic crisis, EBITDA levels of the company dropped steeply and cost saving projects only partly mitigated the negative impact of lower volumes and adverse movements in Fx rates.

The downturn resulted in a breach of senior debt covenants. PwC was engaged as a financial advisor to the Noteholders, a group of American and British institutional investors who have subscribed “loan notes” issued by the company.

Approach

We provided the Noteholders with clarity on:

• Ability of the group with regard to debt service payments in the short and the medium term;
• The different options going forward and the corresponding value creation or destruction;

PwC performed an Independent Business Review (IBR) in which the following aspects were analysed:

Recommendation

We adviced the Noteholders to support the group’s turnaround. Based on the IBR report, they took control of the process and steered the financial stakeholders (main shareholders and local banks) towards the execution of a framework agreement in order to support the group in its turnaround.

Furthermore we recommended to monitor and to report on the progress during this turnaround process in the following domains:

Results

Deceuninck has reached a long term agreement with its lenders regarding the restructuring of its credit agreements.

Key elements of the financial restructuring agreement:

• Conversion of bilateral loan agreements with local banks into a global bullet loan for an amount of 137 mio EUR;
• Replacement of previous agreements with Noteholders by two new agreements for an amount of 28.2 mio EUR and 85.5 mio USD;
• Strengthening of the company’s balance sheet by means of a capital increase of 85 mio EUR.