MBK Partners is expected to successfully refinance the acquisition of the country’s outdoor clothing brand NEPA despite dampened sentiment due to the outbreak of the coronavirus,
According to industry sources on April 2, South Korea’s largest private equity firm MBK Partners is likely to close its refinancing on its portfolio company NEPA next week. The deal has been jointly arranged by Woori Bank and Mirae Asset Daewoo.
The PE firm started its refinancing process at the beginning of this year. It was initially expected to close around the end of March, but the process has been delayed as the outbreak of the coronavirus has dampened investor sentiment.
MBK Partners has refinanced 180 billion won, which consists of a 120 billion won term loan, a 20 billion won revolving credit facility and a 40 billion won mezzanine debt, with a three-year maturity.
The interest rate is in the mid-six-percent range, similar to that for the existing debt. The firm aims to repay the existing debt which matures in April. Eight or nine lenders participated in the latest refinancing process.
As of the end of 2018, NEPA has 210 billion won worth of debt, which is composed of senior debt and mezzanine debt. The company also has 89 billion won worth of subordinated debt.
MBK Partners bought NEPA for 940 billion won via its special purpose company TB Holdings in 2013. Of the total, the buyout firm funded 450 billion won through acquisition financing. The acquisition financing was jointly arranged by Hana Daewoo Securities (currently Hana Financial Investment), Kookmin Bank, Woori Investment & Securities and Hanwha Life Insurance.
The buyout firm has repaid its acquisition financing every year by asset securitization. With TB Holdings merged with NEPA in 2015, the outdoor clothing company is currently the borrower of the acquisition financing. The acquisition financing was initially supposed to mature in April 2018, but lenders and MBK Partners agreed to extend maturities by two years to April 2020.
Against the backdrop of sluggish industry conditions, NEPA finally made a turnaround in 2018. The company recorded earnings before interest, taxes, depreciation and amortization (EBITDA) of 65.2 billion won in 2018, exceeding 60 billion won for the first time in three years. It posted EBITDA of around 45 billion won in 2019. NEPA currently has the second largest market share in the domestic outdoor clothing market.
(By reporter Han Hee-yeon)