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Officine Maccaferri hires BCG for management roles and CRO as group strikes deal with Carlyle over financing

Officine Maccaferri has hired Boston Consulting Group to assist with the implementation of its workout plan and the post-restructuring business plan, following several departures at the company over the last months, according to two sources familiar with the matter. BCG will work alongside Officine's new Chief Restructuring Officer (CRO) to launch the turnaround of the geotechnical solutions provider, added the sources.

The CRO appointed to Officine Maccaferri’s Board of Directors is Sergio Iasi, according to a statement released by the company. Iasi most recently supervised the restructuring of Trevi Finanziaria Industriale, an Italy-based engineering company engaged in manufacturing plants and rigs, offering water and oil drilling services and underground engineering.

BCG joins an advisory roster for the group that includes Rothschild as financial advisor and BonelliErede as legal advisor.

Negotiations to rescue the group have continued amid the coronavirus emergency, which hit Italy before the rest of Europe and put the entire country in a lockdown since 9 March. The company eventually announced last Friday (20 March) that it had accepted a proposal involving the provision of new financing from an ad-hoc group of bondholders.

The plan envisages a super senior bridge financing of up to EUR 60m for Officine, with a maturity date falling at least 18 months after the issue date. The bridge financing will be refinanced by a longer-term post-restructuring super senior financing with a maturity date of at least four years after the issue.

The facilities will be used by Officine to normalise working capital and replace some credit facilities which have recently become unavailable, settle overdue supplier payments, mitigate liquidity constraints in certain foreign subsidiaries and fund a new business plan.

The noteholders will hold 96% of Officine at closing, since following the issuance of the long-term financing the ad-hoc group will be able to convert EUR 30m of it into 83% of Officine shares, diluting the collective equity holdings of the noteholders to 13% and those of SECI to 4%.

On a meeting held on 10 March, a majority of Officine Maccaferri’s bondholders (73.64%) had approved the receipt of additional EUR 70m by the company to support its relaunch process and improve its liquidity position. Furthermore, the noteholders gave the greenlight for the restructuring and relaunch process to start without automatic acceleration, according to a press statement by the company.

A forbearance granted by the committee representing at least 54% of the notes following the failure to pay the bond coupon due on 1 December had expired on 15 March.

The bondholders also approved the appointment of Ernesto Apuzzo as their representative.

Officine Maccaferri has released an update on its financial performance for 2019. Preliminary revenues came to EUR 490m last year, down 3.6% versus 2018, while EBITDA fell by EUR 11m Year-on-Year (YoY) to EUR 35m.

“The figures show a decline but it’s not that dramatic, considering the situation the group has been going through this year,” commented the first source familiar.

Officine is working on a new business plan, which envisages an improvement in the company's margins across the board. Due to the uncertainty about the economic situation caused by COVID-19 and the potential persistence of liquidity tensions, the revised guidance for 2020 forecasts revenues between EUR 450m and EUR 480m and an EBITDA margin in the range between 6% and 7%.

The previous strategic plan, developed under the supervision of the Maccaferri family, predicted a net revenue compound annual growth rate of 4%, to get to approximately EUR 590m in net revenue by 2023, with an expected EBITDA margin of 12%.

Carlyle’s proposal for the group also envisages separate super senior bridge financing of EUR 10m for SECI and of up to EUR 12.5m for mechanical engineering company SAMP (with an additional EUR 12.5m to be provided by another financial partner). The other fund participating contributing to the financing will be private debt provider Muzinich, according to Italian newspaper Bebeez.

The financings will be issued in the form of listed bonds, to be approved in the entity’s debt-restructuring plan by the relevant authorities. At the approval of each entity’s debt-restructuring procedure, the relevant super senior bridge financing will be refinanced with four-year exit financing provided by the lender.

After conclusion of the whole debt-restructuring process, SAMP's equity ownership may be subject to a substantial change of control up to a 90% dilution of the existing shareholders, subject to the approval of the relevant authorities of SECI and SAMP.

SAMP had filed for concordato preventivo on 3 December 2019.

The Carlyle-led bondholder group has not been the only suitor for the Maccaferri group. A separate offer tabled by a consortium consisting of Oxy Capital and Illimity expired in late February, as reported. Fortress had also reportedly expressed interest in the group. Italian turnaround fund QuattroR had sent a formal manifestation of interest in October.

SECI Holding and the other companies – including the alternative energy division (Enerray, Exergy and SECI Energia, the subholding which controls Sebigas), SADAM (sugar production), Sapaba (real estate) and Felsinea Factor (factoring) – had originally been admitted to pre-insolvency proceedings in early June 2019.

The HoldCo secured a number of extensions from the Bologna court to present a restructuring plan for itself and eight other entities in the group. As only three entities (Sapaba, Exergy and Sebigas) eventually filed their plans on the deadline of 3 January, SECI and the remainder entities were declared inadmissible to concordato preventivo proceedings on 17 January due to their inability to meet the court-set deadlines.

While the Bologna tribunal’s decree was only a formality and the company should be readmitted once it submits a plan, a separate bankruptcy petition for SECI was presented by a general prosecutor, with a hearing pencilled in for 3 April.

Since mid-January, the group has presented restructuring plans for all its companies except the HoldCo and SECI Energia.

SECI is aiming at presenting all remaining proposals to the court of Bologna in the coming days, therefore re-enter concordato proceedings without even getting to the insolvency hearing, as reported.

SECI declined to comment.

by Giulia Morpurgo and Chiara Elisei

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