Marelli Holdings, KKR-owned supplier of auto parts, had proposed a waiver around $3.52bn of debt. The firm said in the creditors’ meeting on May 31, that this is the effort to revitalize the business plan. The proposal of request was sent to 26 domestic and international lenders for $650m additional KKR investment. This is a restructuring covering Marelli’s 3000 employees as part of the revitalization plan.
Marelli is looking for a waiver representing 42% of ¥1.1trn from the amount of debt of the outstanding loan. On the other hand, Marelli’s largest lender, Mizhuo Bank announced that the possibility of irrecoverable collection of claims could occur. The total is ¥388.5bn loan for the auto parts supplier. Other banks like Shinsei Bank, Sumitomo Mitsui Trust Bank. and Resona Bank are also announcing the same thing. Each bank covers ¥9.70bn, ¥76.73bn, and ¥44.34bn respectively.
Furthermore, the lenders argued that they have provisioned the necessary action for the possible losses. Previously, Marelli has filed a plan on its business reconstruction. This is through an alternative dispute resolution going right after maintaining consent from all of Marelli’s lenders. The outstanding debt of the firm covers ¥1.1trn. This includes Asia’s largest buyout loan in 2019 previously. It happened when KKR-owned Calsonic Kansei acquired Magneti Marelli. It is the high car parts unit of Fiat Chrysler Automobiles in Italy.
Last year Calsonic Kense reached a ¥685bn-equivalent of seven-year senior loan to support the LBO. The loan split covers a €1.011bn term loan, €253m term loan, a €450m revolving credit, a €383bn term loan, and a €96bn term loan. The borrowings purchase the interest margins of below 200bp over Libor. This is actually lower than the current market standard.
