KKR nears deal to restructure German car repair chain ATU

Reuters

FRANKFURT, Oct 24 (Reuters) - Private equity group KKR is nearing a deal to restructure the debt of loss-makingcar repair chain Auto-Teile Unger (ATU), a householdname in Germany, hoping to draw a line under an ill-fatedinvestment.

KKR and ATU's management have agreed on the main points of adeal with the repair firm's main creditors, credit investmentgroup Centerbridge and funds managed by Goldman Sachs, ATU saidin a statement on Thursday.

Centerbridge has also agreed to supply ATU with 25 millioneuros ($34.46 million) in fresh liquidity, and the agreement isdue to be finalised before the end of the year, ATU added.

ATU is suffering from weak customer demand in the Europeancar market, which has been a prime casualty of the continent'seconomic crisis as hard-pressed consumers defer purchases.

Online shops for car parts - such as Delticom -are also eating into its business.

ATU has 600 million euros of debt, comprised of 450 millioneuros in two senior bonds - most with coupons of 11 percent andothers with a variable coupon of 9.75 percent above Euribor, as well as 150 million euros in junior bonds witha coupon of 7.25 above Euribor.

About 75 percent of the debt is held by Centerbridge andGoldman Sachs funds, most of which will be swapped for equity,two sources familiar with the negotiations said - a move thatwould dilute KKR's 100 percent stake to a minority holding.

Reuters first reported in August that KKR and Centerbridgewere in talks over a debt-for-equity swap.

An additional goal of the talks is to reduce the coupon ofthe remaining debt, one of the sources said.

KKR bought ATU from private equity peer Doughty Hanson for1.45 billion euros in 2004, financing the deal with large sumsof debt, which was loaded on to ATU's books. In 2008, KKRinjected about 140 million euros of equity into KKR to save itsinvestment from bankruptcy.

ATU's earnings before interest, taxes, depreciation andamortization (EBITDA) dropped to 62 million euros in its fiscalyear 2012/2013, which runs until the end of June, from 103million the year before. It posted a net loss for 2012/2013.

Centerbridge, which recently invested in bank branches beingsold by Royal Bank of Scotland, has $20 billion ofassets under management.

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