Sunday, July 29, 2012

Carlyle's Distressed IMO Carwash Bid


Rothschild ran an auction for The Carlyle Group's IMO Carwash, which TDR Capital LLC won.  Carlyle and TDR entered negotiations on IMO Carwash, which Carlyle acquired in 2006 from JPMorgan Partners, a frothy time for private equity underwriter (PEU) acquisitions.  Carlyle loaded IMO Carwash with debt, £355 million in 2009, the year it stuck it to lenders:

The sponsor (Carlyle) wants senior ranking creditors to cut their debt claims by a third and junior creditors to write off all their debt, in exchange for equity stakes.
Unlike what Carlyle did to Mrs. Fields or Brintons, IMO's creditors and a London bankruptcy judge played along, enabling The Carlyle Group to retain control.  Nearly half of IMO's debt turned to equity,  £185 million at present.

TDR Capital treated IMO Carwash like the distressed investment it is.  Carlyle refused TDR's bid and will go to the debt market for refinancing.  Carlyle has billions in dry powder.  If no Carlyle fund will provide credit, IMO's truly a PEU.

Update 7-30-12:  I wondered how Carlyle retained control of their bankrupt affiliate.  Apparently, Carlyle did not cram itself down.  Bloomberg got fooled by the Sunday Telegraph, as did I.