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Leoni AG is planning to hold another bank meeting in mid-April as the Germany-based cabling and harnessing supplier to the automotive industry seeks to extend its debt maturities to at least the end of 2024, according to two sources familiar with the matter.
The company has already held a round of debt extension talks on 24 March with the RCF bank lenders following the publication of the group’s FY21 results. The RCF lenders have split into two separate groups and were advised by Houlihan Lokey and PJT, as reported.
Houlihan Lokey and Kirkland & Ellis will represent lenders of the company’s EUR 750m syndicated RCF (RCF I) maturing in June 2023 while PJT and Freshfields are representing lenders to a EUR 245m syndicated revolving credit facility (RCF II) and a EUR 330m working capital facility (RCF III) maturing in December 2022, both sources said.
“They have different advisors because there were different groups after banks provided new facilities in 2020,” a third source familiar said.
Leoni entered into RCF III in April 2020, of which as much as 90% is guaranteed by the German Federal Government and the state governments of Bavaria, Lower Saxony and North Rhine-Westphalia, according to a Debtwire credit report and a press release.
Dentons has reprised its role representing Schuldschein lenders following the company’s 2019 restructuring, one of the sources and the third source familiar said.
Leoni has approximately EUR 400m of Schuldschein that mature from 2022–2028, beginning with EUR 54m this year.
Source: Debtwire Credit Report
The company has retained Herter & Co and Roland Berger to act as financial advisors, while Latham & Watkins acts as legal advisor.
Leoni first retained debt advisory firm Herter & Co to advise on a refinancing last year, as reported by Debtwire in December.
Leoni is in “constructive discussions” with the syndicate banks regarding a refinancing in order to secure the financing beyond 2022, a company spokesperson said in response to Debtwire's queries on latest developments.
There is no liquidity need but it is tough to refinance in the current environment of market volatility, as reported.
“The A&E was on the table already before the war in Ukraine but has become more pressing now of course. But it’s still wait-and-see for now, no imminent action required,” said the third source. The company has direct exposure to the war in Ukraine through two manufacturing facilities located in the far western region of the country.
Leoni’s financial position will benefit from the sale completed in January of its Business Group Industrial Solutions division, which has led to a cash inflow of more than EUR 300m in the quarter ended March.
The company also confirmed during their FY21 earnings call on 23 March that all undrawn credit lines are firmly committed until at least the end of 2022 and that the RCF II and RCF III have been reclassified to short-term financial debt. Net debt at year-end stood at EUR 1.45bn with financial leverage at 4.1x.
Total available liquidity at year-end totalled EUR 412m. Leoni saw a recovery in EBIT in 2021, swinging from negative EUR 280m in the prior year to EUR 91m. Free cash flow improved, but remained negative at EUR 12m versus EUR 74m in the prior year.
Dentons and Kirkland & Ellis declined to comment.
