Vita Group in Restructuring

April 22, 2009

Cleary Gottlieb advised the Vita group and its controlling shareholder TPG Capital in a financial restructuring as a result of which debt in excess of €600 million was written down to approximately €100 million in exchange for a 40% equity stake in the restructured group and €95 million of new secured debt was provided by new money lenders including TPG Capital which remains the largest shareholder with control of the board.

Vita was taken private by TPG Capital in a leveraged buyout in 2005. Its main business lines are petro-chemical based products used in the home furnishing and auto sectors.

The restructuring was implemented using a “scheme of arrangement” under the Companies Act 2006. This is a court process which binds consenting and non-consenting creditors if the proposed restructuring is approved at a specially convened meeting by at least 75% by value and more than 50% in number of each relevant class of those creditors. In certain circumstances, a UK scheme can be used for non-UK companies. In the Vita restructuring the scheme related to a company incorporated in Luxembourg. The court must also approve the restructuring at a “fairness hearing”. The Vita scheme was completed very quickly with the initial hearing on March 27, 2009 and the sanctioning of the scheme on April 22, 2009.

The restructuring and new financing required the negotiation of complex debt, shareholder and warrant documentation and the release and re-taking of a full security package in 18 jurisdictions. Cleary Gottlieb took the lead in advising Vita and TPG Capital on the negotiation of the standstills, the term sheets and final documentation for and negotiation of the restructuring, the new financing, the new shareholder arrangements and the management incentive scheme as well as the tax structuring. Cleary Gottlieb also advised throughout on negotiations with trade credit insurers and the lender under a borrowing base revolving credit facility.