A Guide to Bank Accounts

Lpc schenck pulls 605 mln euro loan refi and dividend payout


* Loan investors reject deal due to aggressive structure* Existing debt will remain in place* Approx. 150 mln euros dividend cannedBy Claire RuckinLONDON, June 9 IK Investment Partners' German industrial weighing specialist Schenck Process has pulled a 605 million euro ($680.38 million) leveraged loan, halting plans to refinance existing debt and pay a dividend to owners, it was announced on Tuesday. IK Investment launched the dividend recapitalisation in May via Commerzbank, HSBC and Unicredit, but was forced to abandon the deal after some loan investors deemed it as being too aggressive, bankers close to the deal said."IK bit off more than it could chew," an investor said. As a result of the deal being pulled, Schenck's existing capital structure will remain in place and IK will not take the approximate 150 million euros it had planned to take out of the business."IK Investment Partners and German industrial group Schenck Process have decided not to continue to explore a possible dividend recap for the time being. The existing long-term financing of Schenck Process which includes senior and subordinated debt will remain in place as a result," an IK spokesperson said.

"IK does dividend recaps when appropriate, but only responsibly. In this case, a dividend recap was not an economically sensible option."A number of investors thought leverage on the deal was too high while pricing wasn't attractive enough to compensate them for the increased risk, the sources said. The deal had started to look strained last week when pricing on the euro term loan came in at the wider end of guidance, at 450 basis points (bps), from initial guidance of 425bp-450bp."IK wanted too much. Leverage was too high, pricing was too low and they wanted a dividend too," a second investor said.

Some investors were also not happy at a 24-month portability request by the company as part of the deal, the sources said. Portability enables debt to remain in place in the event of a sale. Typically when a company is sold it triggers a change of control provision, which results in an immediate debt repayment. It can be seen as aggressive, as it takes more control out of the hands of investors."Portability is not popular and is generally resisted as a lot of investors will buy into a credit based on who owns it and the track record of a sponsor matters a lot. In most cases investors are happy to accept portability only if the credit is in such good shape they are ambivalent about the owner. People also want to get paid for financing an acquisition and portability stops that," a senior loan banker said.

DISCIPLINE The decision to pull the deal is unusual in a market plagued by technical conditions, where demand outweighs supply and cash-rich investors seek to put money to work at increasingly aggressive terms. Some have said investors' unwillingness to commit to the deal is positive for Europe's leveraged loan market, as it shows market discipline."It is good to see the market has some discipline as there have been a few deals recently where pricing is tight and structure is aggressive, it is nice these types of terms won't be accepted on everything," the first investor said. IK Investment acquired Schenck in 2007 from HgCapital for 450 million euros, backed with a 340 million euro senior financing arranged by CIBC and Dresdner and a 70 million euro mezzanine facility, pre-placed with Babson Capital, according to Thomson Reuters LPC data. IK attempted to sell the business in 2012 but pulled the process after offers were deemed too low, below the 700-800 million euro price tag, leading IK to amend and extend the company's debt. Headquartered in Germany, Schenck operates across 23 countries. Since acquiring Schenck, IK Investment has expanded the business with a number of acquisitions and the company now has over 3,200 employees and a turnover of around 600 million euros. ($1 = 0.8892 euros)

Man says dog ate his money and us treasury paid up


A Montana man who pieced together the remnants of five $100 bills eaten by his one-eyed dog last year is sporting a $500 check he says he received this week from the U.S. Department of the Treasury to replace the digested funds. Wayne Klinkel said his dog Sundance, a golden retriever, sniffed the wad of bills out of a car cubby space while waiting for Klinkel and his wife to return from lunch, and the canine made the currency his lunch. Klinkel, a graphic designer from Helena, Montana, who works for the local newspaper, the Independent Record, said he found Sundance had left nothing uneaten but one intact dollar bill and a small piece of a single $100 note."He's been notorious for eating paper products," Klinkel said about Sundance. "I knew right away what had happened."Klinkel rescued Sundance as a puppy from a shelter 12 years ago and the dog later lost his left eye to surgery. For days after the December incident, Klinkel followed Sundance around in the snow, collecting his droppings in a plastic bag, he said.

Klinkel kept the bag of doggy mess frozen in the cold outside his house, and after weeks of hesitation, he went forward with his plan for retrieving the soiled cash by thawing the droppings in a bucket of soapy water. Using an old metal mining screen and a hose, he separated the $100 bill pieces from the rest of the matter, then washed and began to assemble the tiny paper fragments."It was sort of like putting the puzzle pieces back together," Klinkel said.

He then took the taped bills to a local bank and the Federal Reserve in Helena but was turned away, he said. Klinkel was eventually directed to the U.S. Department of Treasury's Mutilated Currency Division, where he mailed the digested bills with a notarized letter on April 15."There was no guarantee I was going to get anything back," Klinkel said. The Treasury Department offers reimbursement for some proven cases of damaged currency, and a standard claim can take up to two years to be processed, according to the department's website.

"When mutilated currency is submitted, a letter should be included stating the estimated value of the currency and an explanation of how the currency became mutilated," the website says. Klinkel said he didn't hear a word from the department until Monday, when he received a crisp $500 check in the mail from the Mutilated Currency Division to replace Sundance's midday snack six months prior. The Independent Record, the paper that employs Klinkel, has posted a picture on its website of Sundance with the check dangling from its mouth. An operator with the U.S. Department of Treasury on Thursday said department representatives were furloughed and unavailable for comment on Klinkel's reimbursement.