Company overview

• Schefenacker is an automotive component supplier which manufactures and assembles interior / exterior mirrors and rear-end / interior lighting cases for major OEMs

• The Company has operations in North America, India, China, Japan, Korea and Australia.  Key customers include Ford, Daimler Chrysler and GM

Events Leading to the transaction

• In February 2004, the Company issued €200m subordinated Bonds and in May 2005 refinanced its Senior debt through the issuance of a €50m 1st lien Revolving Credit facility and c.€155m 2nd Lien facility

• The Refinancing was predicated on the achievement of an operational turnaround plan to cut costs by €20m per annum by 2007

• Post the refinancing, the Company was exposed to significant pricing pressure from OEMs due to contractual price-downs and increased raw material prices / energy costs that it was unable to pass on to customers

• In August 2006, the Company announced that poor trading performance and unrealised operational restructuring savings would result in an inability to service its existing indebtedness and a breach of financial covenants under the 1st and 2nd Lien debt at the end of Q3 2006

Solution

• Close Brothers Corporate Finance was engaged in September 2006 by an Ad Hoc Committee of Bondholders to act as financial restructuring advisor throughout tri-partite restructuring negotiations between Dr Schefenacker (the sole shareholder), the 2nd Lien Lenders and the Ad Hoc Committee of Bondholders

• The solution involved a combination of a refinancing of senior indebtedness, rolled 2nd Lien, the injection of new money in the form of Mezzanine financing and a debt for equity swap:

• - the resulting capital structure included a €25m 1st Lien Revolving Credit Facility, €170m Senior Facility and c.€110m mezzanine indebtedness, of which Dr Schefenacker injected €20m

• - post restructuring equity was apportioned c.70% to Senior Lenders, 25% to Dr Schefenacker and 5% to Bondholders, with Bondholders receiving an additional €7.5m cash and warrants for an incremental 10% of the equity

For more information regarding the transaction, please contact Francois Vidal or Andrew Cleland-Bogle on

+44 (0)20 7655 3100.