as·si·du·i·ty

In Mar-05 affiliates of The Carlyle Group acquired substantially all of the shares of the Dutch petroleum refining, tank storage and marketing company Petroplus International N.V. (‘Petroplus’) in a recommended tender offer at €9.00 for every outstanding share of common stock or an optional stock alternative. This valued Petroplus’ equity at approximately €281m (including the take out of the company ESOP). Including approximately €151.7m in net debt (€242.5m minus €90.8m excess cash) excluding debt drawn under the working capital facility and adjusted for €22.6m in financial fixed assets (book value) this valued the company at some €410m.
This implied the following multiples for the 12 months ended 31-Dec-04: 6.5% of net sales (€6,261m, 13.5x net tangible capital turnover), 6.0x EBITDA (€68.6m – excluding non-recurring items like €46m book profit on sale of Tango gas stations -, 1.1% margin), 11.2x EBIT (€36.6m, 0.6% margin), 1.4x net tangible asset value (€200m) and 97% of the book value tangible fixed assets (€423m).

The acquisition was financed by: (1) €155m in equity from sponsors and Petroplus shareholders electing to receive equity in the buyout vehicle (70/30 debt to equity); (2) €345m in senior secured credit facilities (4.6x senior debt to EBITDA). This financing came in addition to existing US$1.13bn in aggregate amount of working capital facilities (of which US$540m was committed) and a €96m revolving guarantee facility (for VAT and excise duties) at 31-Dec-04.
Some relevant items
In Dec-04 Petroplus agreed to sell 80% of the Dragon LNG terminal it developed at Milford Haven (UK) to BG Group and Petronas. Although the sale closed the cash proceeds to Petroplus would not be available until certain milestones have been achieved (project financing, regulatory exemption and permits). This was expected to occur during Q2’05 but not before the end of Apr-05 and therefore not before the close of the tender offer. The book profit on the sale was expected to be within the GBP45-50m/€65-72m range (total cash proceeds were not disclosed). This would reduce the effective transaction valuation to approximately €352m or 5.1x EBITDA.

Prior to the equity tender offer, Petroplus offered to repurchase all of its outstanding €225m principal amount 10.5% senior notes due 2010 at 108.75%. On 2-Feb-05 97% of outstanding senior notes were tendered.