Filed under: Food & Staples Retailing
On 17-Oct-02 CVC Capital Partners (‘CVC’) acquired Laurus NV’s (‘Laurus’) troubled Spanish supermarket subsidiary Grupo El Arbol Distribucion y Supermercados S.A. (‘El Arbol’). The Laurus 2002 annual report provides some insight into the transaction. El Arbol had €401m in total borrowings (including inter-company funding) at 31-Dec-01 and saw an additional €47m in cash outflow from operations in the year to 17-Oct-02 resulting in estimated total borrowings of €448m.
This is pretty close to what the company estimated it would have lost had it chosen to liquidate the company (€455m according to leaked company memos).
The deal with CVC required Laurus to: (i) convert €176m in inter-company loans into equity; (ii) inject €40m in additional capital; (iii) provide €28m in senior secures loans, and (iv) provide €30m in subordinated convertible loans (convertible at the option of CVC).
Deducting from the €448m in total borrowings pre-restructuring: the €176m in converted inter-company loans, the €40m capital injection and the €30m in subordinated convertible loans results in approximately €202m in borrowings at El Arbol. Laurus then transferred the shares to CVC for a nominal amount. According to CVC the transaction valued El Arbol at US$181m/€186m. The €16m (€202m minus €186m) delta could be explained by the – undisclosed – cash balance at El Arbol.
This implied the following mutiples: 25.7% of sales for 2002 (€785m), 1.5x book value of assets (€130m at 31-Dec-01). As the company reported a loss before interest tax depreciation and amortization (€15m loss before interest and tax) in both 2001 and 2002 no meaningful earnings multiples could be derived.
Filed under: Media
In Aug-02 The Carlyle Group and Welsh, Carson, Anderson & Stowe agreed to acquire Qwest Communication International’s directory publishing business: Qwest Dex for a total amount of US$7.05bn (excluding fees and expenses). This implied a multiple of 451% of restated 2001 revenues (US$1,53bn), 7.1 times restated 2001 EBITDA (US$993m, 65% margin!), 7.3 times restated EBITA (US$969m, 63% margin).
The transaction was divided in two parts: unregulated directories (Dex Media East) and regulated directories (Dex Media West). Dex Media East was acquired in Nov-02 for US$2.75bn in cash, based on a multiple of 7.4 times baseline adjusted EBITDA. Dex Media West was acquired in Sep-03 for US$4.29bn. This implied a multiple of 6.5 times 2001 baseline adjusted EBITDA.
The acquisitions were financed with a total of US$3.39bn in senior secured term loans (senior debt 3.4x 2001 EBITDA), two US$100m revolvers, US$2.14bn in senior subordinated notes (total debt 5.6x EBITDA) and approximately US$1.62bn in equity from the sponsors (approximately 80/20 debt to equity).
In Nov-03 and Feb-04 a red hot high yield market allowed Dex Media, Inc. to pay dividends of US$750.2m and US$250.5m from the proceeds of three newly issued loan notes of which approximately US$500m in the form of unsecured senior subordinated discount notes due November 2013 (in other words: all the way in the back of the line and no cash interest until May-09).
In May-04 Dex Media, Inc. filed for a public offering of US$1.5bn worth of primary and secondary shares. Pro forma EBITDA in 2003 amounted to US$921m, down over 7% from 2001 as the margin decreased from 65% in 2001 to 56% in 2003 on a 6.6% increase in revenue.
Filed under: Multiline Retail
In Dec-03 Baroness Retail (CVC Capital Partners, Texas Pacific Group, Merrill Lynch Global Private Equity) acquired UK department store company Debenhams plc in a scheme of arrangement for 470p per share valuing the equity at £1.67bn. Including £128m net debt at 30-Aug-03 and deducting £33m in investments total consideration amounted to £1.76bn. This implied the following multiples: 97% of LTM sales (£1.81bn, 1.9x capital turn), 6.8x LTM EBITDA (£259m before £17m exceptional costs, 14.3% margin), 10.0x LTM EBITA (£176m pre-exceptionals, 9.7%).
In Jun-03 affiliates of CVC Capital Partners (‘CVC’) acquired Danish building materials and DIY products retailer and distributor Danske Traelast A/S in a public tender offer at DKK 171 per share valuing the equity at DKK 4.04bn, including DKK 2.08bn in net debt at 31-Mar-03 the total consideration amounted to DKK 6.12bn. This implied the following multiples for the year ended 31-Dec-02: 41% of turnover (DKK 14.88bn), 6.8x EBITDA (DKK 901m – before DKK 44m in real estate gains -, 6.1% margin), 9.2x EBITA (DKK 669m – before DKK 44m in real estate gains -, 4.5% margin), 10.8x net earnings (DKK 374m), 1.1x net tangible capital employed (DKK 5.73bn). The transaction was financed with DKK 3.56bn in senior debt (3.9x EBITDA), a DKK 1bn revolver and a DKK 892m mezzanine facility (total debt 6.0x EBITDA) and approximately DKK 1.84bn in equity (70/30 debt to equity).
Filed under: Machinery
In Aug-02 Berkshire agreed to buy CTB International, a manufacturer of equipment for the poultry, hog, egg production and grain industries. The $12.75 per share offer implied a equity valuation of $140m (6x EBT) plus the assumption of $40m in debt for a total consideration of 7x EBITA.
