Special Situations Case Study: Project Neptune Refinancing

Joshua Hawley

11 minutes ago

4 min read

Executive Summary & Transaction Overview

Project Codename: Project Neptune.
Client / Target Entity (Blinded): Leading Global Automotive Plastic Components Manufacturer (Operating Company / OpCo) held by a Luxembourg Holding Entity (HoldCo).
Lead Financial Advisor: IGA Capital Finance Brokers LLC ("IGA Capital").
Mandate Scope: Exclusive Debt Advisory & Capital Restructuring Mandate to refinance a €235M short-term bridge facility.
Mandate Timeline: September 2, 2025 – November 15, 2025.
Primary Key Outcome: Successfully restructured the capital framework, conducted global institutional market outreach across private credit funds, direct lenders, and international banks, and secured a verbal commitment / head of terms indication for a €170M–€175M senior debt facility from a lead European private credit institution (Sona Asset Management) within an exclusive 10-week execution window.

1. Target Business Profile & Collateral Base

Operational Footprint & Market Position

Global Footprint: Top-10 global Tier-1 automotive plastic solutions supplier operating 37 production facilities across 22 countries across Europe, the Americas, and Asia, supported by over 10,000 employees and 550+ R&D engineers.
Product Diversification: Diversified portfolio spanning Exterior Paint & Surfaces (39%), Powertrain Systems (28%), Interior Components (27%), Air Vents (5%), and Opening Systems (1%).
OEM Customer Base: High-quality global original equipment manufacturer (OEM) customer network representing approximately 25% of all vehicles produced in its core markets.

Financial Baseline & Asset Backing

Consolidated Revenue: ~€1.1B consolidated annual turnover in FY 2024.
Operating Cash Flow & EBITDA:
- FY 2024 Audited Consolidated EBITDA: €101.3M.
- FY 2025 Projected Standalone OpCo EBITDA: €86.9M (growing to €112.1M by 2028 following North American perimeter rationalization).
- Operating Cash Flow: €95.4M net cash provided by operating activities.
Asset Base & Collateral: Total consolidated assets of €970.5M, including €374.7M in Property, Plant & Equipment (PP&E), €146.5M in trade receivables, and €81.6M in inventory.

2. Special Situation Dynamics & Structural Challenges

[ Legacy Holding Structure ]
   Ultimate Beneficial Owner (UBO) / Sponsor Affiliate
                 │
                 ▼
     Luxembourg HoldCo (GT S.à r.l.)  ──────►  [ €235M Santander Bridge Loan ] (No direct operating cash flow)
                 │
                 ▼ (100% Share Ownership)
     French OpCo (Novares Group S.A.S.) ──────►  [ €87M–€101M EBITDA / 37 Factories ] (Generates operating cash flow)

────────────────────────────────────────────────────────────────────────────────────────────────────────────────

[ IGA Capital Restructured OpCo Framework ]
     French OpCo (Novares Group S.A.S.) ──────►  [ New €170M–€175M Senior Secured Debt Facility ]
                                                 (Direct Cash-Flow Servicing, Ring-Fenced from Sponsor Exposure)

HoldCo vs. OpCo Structural Mismatch:
- The acquisition was originally financed via a short-term €235M bridge facility provided by a major European commercial bank (Santander) sitting at the non-operating Luxembourg HoldCo level.
- The HoldCo possessed no independent operational cash flows, while 100% of cash generation resided within the French OpCo and its operational subsidiaries.
Sponsor & UBO Contagion Sensitivity:
- The target group’s Ultimate Beneficial Owner (UBO) held cross-ownership in a separate US automotive business undergoing credit re-evaluation.
- This cross-ownership created perceived credit contagion risks, requiring strict operational and legal ring-fencing of the target OpCo to reassure institutional lenders.
Maturity & Enforcement Timelines:
- The bridge lender held a 100% share pledge over HoldCo equity, introducing significant pressure to refinance prior to potential enforcement actions.
- IGA Capital was engaged under a strict exclusive mandate to structure and place a market-clearing debt facility.

3. Structuring Strategy & Advisor Value-Add

Key Execution Steps

Migration to OpCo Balance Sheet:
- IGA Capital restructured the deal architecture to issue the refinancing facility directly at the OpCo level (Novares Group S.A.S.).
- This structure eliminated HoldCo structural subordination and provided direct recourse to operating EBITDA and fixed assets.
Right-Sizing the Debt Quantum:
- Initial Client Target: Full €235M debt rollup.
- Advisor Optimization: Based on cash-flow serviceability models, IGA Capital demonstrated that right-sizing the initial senior debt raise to €170M–€175M (within a overall term sheet framework of €175M–€235M) would optimize the Debt Service Coverage Ratio (DSCR) to >2.8x–6.7x and cap debt-to-EBITDA leverage at ~2.5x–3.0x, matching institutional private credit risk parameters.
Indicative Term Sheet Framework:
- Facility Amount: €170M – €175M Senior Secured Term Loan (expandable to €235M).
- Tenor & Structure: 5-year term, bullet principal maturity with amortizing/interest-only options.
- Indicative Pricing: EURIBOR + 5.00%–6.75% per annum (or ~12.0%–14.0% total yield target depending on tranche seniority).
- Collateral Security: First-ranking charges over OpCo manufacturing equipment, receivables, inventory, and material subsidiary share pledges.

4. Institutional Investor Outreach & Due Diligence

IGA Capital executed non-disclosure agreements (NDAs) and managed a multi-track investor discovery process across North America, Europe, and Asia:

Lender / Institution Category	Institution Name	Engagement Status & DD Milestones	Final Outcome / Status
Lead Institutional Credit Fund	Sona Asset Management	NDA executed Sept 2025; management presentation Oct 2, 2025; completed 9-part Q&A workstream on order book, CAPEX, and working capital.	Lead Progress: Issued verbal terms for €170M–€175M senior facility; advanced to Credit Committee.
European Direct Credit Fund	Northwall Capital	NDA executed Oct 2025; management intro call Oct 8; detailed 6-part DD on EBITDA reconciliation and FCF.	Passed due to historical 8-year average free cash flow metrics.
European Private Credit Fund	Arcmont Asset Management	Virtual data room access, Q&A, and detailed due diligence.	Passed due to Investment Committee sensitivity to sponsor affiliate exposure.
Global Private Credit Manager	PAG Assets Limited	NDA executed Oct 1, 2025; compliance screening regarding sponsor ring-fencing.	Advanced to active diligence alongside Sona.
APAC Institutional Underwriters	BlackRock APAC / Orion Credit Capital	NDAs executed Sept 2025; engaged for Asian regional tranche participation.	Active discovery phase.
Regional Middle East Banks	Commercial Bank of Dubai / Gateway IMS	NDAs executed Sept 2025; credit memo and loan structure review calls.	Evaluated bank facility participation.

5. Key Milestone Outcome & Transaction Takeaways

Primary Milestone Achieved

Through IGA Capital’s structured process and debt optimization strategy, Sona Asset Management completed late-stage due diligence and issued a verbal commitment / head of terms indication for a €170M–€175M senior secured facility.
The verbal commitment established a clear path to take out the maturing bridge debt, de-risk the HoldCo balance sheet, and stabilize the operational platform under a 5-year capital structure.

Key Special Situations Lessons

OpCo Reframing Unlocks Liquidity: Transitioning debt from non-operating HoldCos to cash-generating OpCos removes structural subordination friction and unlocks direct recourse to operating EBITDA.
Debt Right-Sizing Accelerates Consensus: Right-sizing the debt quantum from an unserviceable €235M to a sustainable €170M–€175M aligns leverage with private credit risk parameters without starving the business of liquidity.
Multi-Track Global Outreach De-Risks Execution: Running a simultaneous distribution process across European, American, and Asian credit markets ensures execution resilience under compressed timelines.