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PE Investors Climb On Wagon
Deal is W.P. Carey's latest in Europe, a market it has focused on for a number of years, exec says in interview with IDD.
August 19, 2008
WL Ross & Co. and W.P. Carey & Co. said Tuesday that the two firms have completed their $128 million of investment in UK automotive supplier Wagon.
WL Ross, a New York private equity firm and unit of Invesco, invested $70 million in the Birmingham, England–based business through a special rights offering of Wagon’s common stock, boosting its ownership stake to 86% from 15%. In addition, two W.P. Carey real estate investment trusts provided the company with $58 million through a sale-leaseback of Wagon’s manufacturing plants in Waldaschaff and Nagold, Germany, as well as committed $10.5 million in additional financing to support the company’s manufacturing plant expansion.
“Wagon is a classic example of a W.P. Carey credit,” said Jeffrey Lefleur, a W.P. Carey executive director, in an interview with IDD from London. “It’s a well-established, capital-intensive business in an industry facing some difficult times.”
Richard Cotton, chief financial officer of Wagon, said the deal will enable the automotive supplier to fund its growth initiatives and reduce its debt load. As part of the company’s recapitalization, it announced in June that it had entered into a new €125 million, or $184 million, debt facility with five banks.
Wagon, a company established 90 years ago to repair railway wagons, makes auto bodies for European auto companies like Daimler, Peugot, Renault and Volkswagen. The company, which employs 6,500 workers in 10 countries among 22 manufacturing sites, recently secured new contracts with IVECO and Porsche.
Wagon released its fiscal 2008 results in June, generating a 9% increase in sales over the prior year at £714.7 million, or $1.3 billion, in annual revenues. It posted £61.6 million in Ebitda, or $115 million of cash flow, in 2008, according to its annual report.
Wilbur Ross said the financing will enhance Wagon’s long-term value. The financier’s private equity group has experience in the automotive industry through the formation of International Auto Components Group.
For W.P. Carey the deal represents its latest transaction in Europe, where it has sponsored more than $150 million in sale-leasebacks over the last 60 days. “We’ve been very focused on Europe for a number of years, and we’ve been a good source of alternative financing for private equity firms in Europe," Lefleur said.
W.P. Carey sponsored the purchase of two properties in Soest and Bad Wünnenberg, Germany, from German investment firm Arques Industries in July for $58 million, which it then sold back to Arques’ portfolio company, IT distributor Actebis.
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