Westward Group

KKR has seized control of French steel abrasives maker Winoa in a debt restructuring of the company after its previous private equity owner refused to inject cash.

The deal is an indication of more restructurings in Europe as lenders become less accommodating after years of extending the loans of struggling leveraged buyouts in the aftermath of the financial crisis, according to Mubashir Mukadam, head of special situations for KKR in Europe.

“Banks in Europe are less willing to amend and extend, they want new money,” Mr Mukadam told the Financial Times. “Winoa is a very good business with an incredible market share globally but with an unbearable capital structure. It needs capital now when Europe is showing signs of recovery.”

Winoa, formerly known as Wheelabrator Allevard, had been in discussions with its creditors and owner for about a year to renegotiate its loans or be sold when KKR bought more than 50 per cent of the debt at a discount from banks ready to take on losses to exit the credit.

The New York-based buyout group sought a controlling stake in the company in exchange for slashing the debt and injecting additional capital in a rare consensual deal with the owner, LBO France, which has received an undisclosed financial compensation.

In the deal, Winoa’s debt will be cut from €340m, or nearly 7 times earnings before interest, tax, depreciation and amortisation, to €188m, and it will receive €60m in cash. KKR will find itself in the unusual position of holding the majority of both the debt and equity in Winoa until the company can issue a bond to refinance its loans.

Private equity groups including KKR, Apollo, Oaktree and Blackstone, are seeking to take advantage of a dearth of credit in Europe to lend to companies or take control of them after buying their debt. They want to fill the void left by European banks that are cutting assets and curbing lending to meet more stringent regulatory capital.

KKR’s special situations and direct lending teams have invested a