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Schefenacker announces restructuring deal

From Reuters| February 11 , 2007

LONDON (Reuters) -- Troubled German auto parts maker Schefenacker said today that it had agreed a financial restructuring plan with its senior lenders and shareholder that will refocus the business on making car mirrors.

The company's German lighting business will be separated ahead of a planned sale, Schefenacker said, while the U.S. lighting business will be wound down on a solvent basis.

The company said in a statement its current 450 million euros ($584.2 million) of debt would be replaced by a new package of facilities totalling 305 million euros. The group will receive around 55 million euros in fresh money, it said.

Holders of the company's 200 million euros of bonds will be asked to convert their debt into 5 percent of the restructured equity of the holding company of the Schefenacker Group, the company said.

The remaining equity will be allocated between senior lenders and Dr. Alfred Schefenacker, the group's owner.

"If the bondholders agree to this, they will retain a stake in a recapitalized and profitable international mirrors business," said Stephen Taylor, chief restructuring officer at Schefenacker.

The bonds sank to be bid at 3 percent of face value and offered at 8 percent, HVB credit analyst Sven Kreitmair said in a note to clients.

"We believe that at the current EV (enterprise value) of the company of an estimated 200 million euros, the equity of the restructured company has no value," he said.

If the other lenders do not already own a majority of the bonds, "we believe that bondholders will most likely not agree to this proposal, as they have nothing to lose," Kreitmair wrote.

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