Friday, May 29, 2009

Carlyle Group's IMO Car Wash in Lenders' Hands

The Carlyle Group tried to restructure the debt of IMO Car Wash. Rothschild was hired to restructure IMO's debt. Lenders didn't play Carlyle's game, thus IMO Car Wash is up for sale with Rothschild taking bids. Reuters reported:

Some lenders to IMO have bought into the company's debt over the last year, one source said, with an eye on a restructuring deal in the future.

Such a "loan to own" strategy is becoming increasingly common in Europe as distressed debt investors scoop up heavily discounted loans and bonds, expecting either high returns or a stake in the company.

Is this Carlyle's game in the U.S.? The private equity underwriter (PEU) buys distressed debt. Does the Carlyle Group have the same aim? It lost SemGroup and IMO Car Wash to lenders. Will the PEU use Trojan Horse debt to back into new Carlyle affiliates?