* Investment bank lines up debt to back bid
* Blackstone and Oaktree could accept offer paid at par
* Deal has to be struck by June 22 deadline
By Claire Ruckin
LONDON, May 30 (Reuters) - Hedge fund SVP and junior lenders could take over debt-laden German plastic films firm Kloeckner Pentaplast from Blackstone after committing to pay senior lenders’ 850 million euros ($1.05 billion) of debt in full, banking sources said on Wednesday.
The offer, made at a lenders meeting last week on May 23, comes after SVP and junior lenders rejected a consensual restructuring of Kloeckner’s 1.3 billion euros debt pile put forward by owners Blackstone and senior lender Oaktree earlier this year, banking sources said.
The bid by SVP and junior lenders will be backed by their own funds as well as a financing package lined up by one investment bank which could be syndicated at a later stage. Junior lenders will also wipe out 450 million euros of junior debt as part of the move to gain control of the company, the banking sources added.
An M&A process had been launched by Lazard last month but no-one submitted bids for the company, bankers said.
SVP and Blackstone declined to comment.
Blackstone and majority senior lender Oaktree are likely to accept SVP’s offer, bankers said, but it will need to be made before June 22 at which point a covenant breach waiver expires and senior lenders can enforce their debt restructuring proposal as the company will be in default of its loan repayments.
Senior lenders want to restructure the company by reducing senior debt to 500 million euros from 850 million in a debt-for-equity swap and wipe out 450 million euros of junior debt. Oaktree would take control of the company and sell a portion of it back to current owner Blackstone, bankers said.
The junior lenders and SVP threatened litigation against the company to avoid a junior debt write-off being included in the senior debt restructuring proposal, hiring litigation boutique Quinn Emanuel.
Blackstone bought Kloeckner from Cinven in 2007, backed by 1.25 billion euros of leveraged loans, according to Thomson Reuters LPC data. The company has struggled with higher raw materials costs in a difficult economic climate as well as high leverage of around 10 times the company’s 130 million euros EBITDA. ($1=0.8069 euros) (Editing by Mike Nesbit)