RLPC-PAI faces rival bid for troubled Monier Group

LONDON Tue May 12, 2009 5:57pm BST

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LONDON May 12 (Reuters) - Private equity firm Paribas Affaires Industrielles (PAI) is facing a battle for control of building materials firm Monier Group with a group of distressed debt investors, sources said on Tuesday.

Lenders to debt-laden Monier Group -- formerly known as Lafarge Roofing -- rejected an aggressive debt-for-equity swap proposal from PAI and are now awaiting a formal counter offer from a group of distressed investors, two sources said.

PAI declined to comment.

Monier Group is one of the world's largest roof tiling and chimney firms and owns Redland, a UK roof tiling firm.

Apollo Management, TowerBrook Capital and York Capital, which own around 40 percent of Monier Group's debt, made an informal alternative offer to lenders last Thursday, an investor said.

PAI's debt-for-equity offer asked lenders to slash Monier Group's debt from around 1.7 billion euros to 600 million euros in return for a cash injection of up to 150 million euros, he added.

PAI offered lenders around 24 percent of the company and offered the management a small 3-4 percent stake, which would have given it 72-73 percent of the company, the investor said.

"Why would you give up two-thirds of the debt for 20 percent of the company?" he added.

Goldman Sachs is advising PAI and Monier Group.

Monier Group's lenders, which comprise more than 100 banks and hedge funds, are taking a tougher line and want a bigger stake in the firm in exchange for such a large drop in their debt, three sources said.

Reaching a resolution is a pressing concern for Monier Group, which faces a looming interest payment on June 30 and possible covenant breach after a steep drop in earnings before interest, tax, depreciation and amortisation, a source with knowledge of the deal said.

Indicative bids on the company's term loans A, B and C are at 32.5-33.5 percent of face value which suggests stress and the company's second lien loan is bid at 3.6 percent, according to Thomson Reuters LPC data, which points to negligable recovery rates

The source with knowledge of the deal said that there is a "willingness to continue talks" and that the lender syndicate favoured a sponsor-driven solution rather taking control of the company.

Monier Group was bought by PAI in December 2006 in a 2.4 billion euro buyout and Lafarge (LAFP.PA) retained a 35 stake in the firm.

The acquisition was financed by BNP Paribas and JP Morgan which arranged a 1.97 billion euro loan in 2007 that comprised 1.67 billion euros of senior debt and 300 million euros of second lien debt.

(Additional reporting by Simon Meads; Editing by David Cowell)

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