Laurus N.V. announces that it has signed on September 4, 2002 a Letter of Intent with a company owned by funds managed by CVC Capital Partners (CVC), under which it will sell its Spanish operations, comprising of 100% of the share capital of “Grupo El Arbol Distribucion y Supermercados S.A.“ and its subsidiaries and participations (El Arbol).
The final negotiations will take place in the month of September, during which CVC will perform a completion audit. The transaction is expected to be completed around mid October, subject to final agreement on the Sale and Purchase Agreement and a satisfactory outcome of the completion audit, which may give rise to up- or downward closing adjustments.
During the last years, the weak performance and continuing losses of the Spanish operations resulted in an increased indebtedness and a continuous deterioration of equity of Laurus. Divesting the Spanish operations is therefore a significant step towards a restructuring of Laurus as a whole, as discussed earlier in the Explanatory and Offering memoranda of June 13, 2002 and July 9, 2002 respectively.
To strengthen the capital structure of El Arbol the envisioned transaction will involve a significant recapitalisation, by capitalising intercompany loans and injecting new cash by both Laurus and CVC. The new funds will among others be used to refinance debt and provide liquidity. As a part of this financial restructuring Laurus will provide additional liquidity through loan facilities totalling € 54 million of which € 24 million will be medium term and fully secured and € 30 million will be long term, unsecured and subordinated, and may be converted into equity at CVCÂ's option.
Laurus will provide CVC with certain representations and capped warranties. In addition thereto Laurus will assume full responsibility for litigation. The transaction will have a negative equity impact on Laurus, which at the time of the press release is estimated at approximately € 65 million, which amount may be subject to adjustments.
Laurus was advised by ABN AMRO Bank N.V.
Laurus:: With over 46,000 employees and around 2,400 supermarkets both domestic and abroad, Laurus N.V. is one of the mayor Dutch food groups. The company, which was formed in 1998 by the merger of De Boer Unigro N.V. and Vendex Food Groep B.V. operates in The Netherlands, Spain and Belgium. In Spain, Laurus operates supermarkets of its own under the El Arbol name and cash-and-carry stores. In Belgium, Laurus operates full-service supermarkets under the Battard/Echo name and affiliated Spar stores.
CVC: With $ 9 billion of assets under management, CVC is a leading private equity fund management company in Europe. In Spain, CVC has a portfolio of companies with sales of € 1.6 billion and 13,000 employees.
(source: Laurus)
