SGL Group has signed the sale and purchase agreement to sell its cathodes, furnace linings, and carbon electrodes (CFL/CE) business to funds advised by Triton. The two parties have agreed on an enterprise value (cash and debt free) of 250 million euros, which, after deduction of standard debt-like items (mainly pension provisions) as well as other customary adjustments, results in cash proceeds of more than 230 million euros. The final proceeds will be determined based on the balance sheet at closing. The transaction is subject to customary closing conditions, mainly relating to antitrust approvals. Closing is expected in Q4 2017.
According to SGL, "Triton seeks to invest in and support the positive development of medium-sized businesses headquartered in Europe, focusing on businesses in the industrial, business services and consumer/health sectors. The 31 companies currently in Triton's portfolio have combined sales of around 14.4 billion euros and around 89,000 employees.
Following the closing of the transaction, approximately 30 employees in Germany and 600 employees in Poland, who are based at the two production facilities in Nowy Sacz and Raciborz, will move from SGL Group to their new owner, says SGL.
The sale will result in a book profit of approximately 130 million euros in the current fiscal year of SGL Group.
The closing of the sale of the graphite electrode business to Showa Denko is still in progress and final discussions with the US authority on merger clearance are ongoing. SGL says that the outcome of these discussions will not have any impact on the agreed enterprise value or the expected cash proceeds. "Nevertheless, we cannot rule out, from today’s point of view, that closing may slip into the beginning of the fourth quarter 2017," the company said.
With this transaction, the former business unit Performance Products (PP) has been sold at a total Enterprise Value of 600 million euros and approximately 130 million euros above its book value on 30 June 2016, the date when the business was classified as held for sale.
The proceeds from the sale of PP together with the proceeds from the December 2016 rights issue will be used to redeem early the corporate bond with a nominal value of 250 million euros as well as repay at maturity in January 2018 the convertible bond with a nominal value of 240 million euros, thus reducing interest expenses and 'significantly lowering' net debt and improving balance sheet ratios.