Bank takes control of Linpac business
Linpac Group will half its debt and will a major injection of new funds will be received after its private equity owner gave up the plastic packaging business to a group of banks.
Montagu Private Equity, Owner, paid £860m for the business in 2003, has allegedly signed a debt restructuring deal in which it has surrendered its entire stake in the Company.
Reports from news agency Reuters, indicate that the company's lenders will reduce its debt by £320m, (or around half of its current debt burden), and will inject £65m in new equity into the Company. Sources were not revealed, but, the deal claimed to have been signed on Tuesday, was the first part of a three-part debt-for-equity deal.
The deal is seen as putting the group on a sounder financial footing.
It is believed that Montagu entered into talks over its ongoing ownership of the business up to twelve months ago. The refinance of the business was first made public in March, with rumours on the talks mentioned again in June and again earlier this month.
Linpac finances are believed to have suffered from high raw material prices since the start of the recession and exchange rate difficulties related to the weakness of sterling.
Both Linpac and Montagu declined to comment on the deal.
