TFL creditors to proceed with auction in January

Creditors of the company and adviser Leonardo Co will begin the auction in January, according to lawyer Andreas Ziegenhagen.

Efforts to consolidate among European suppliers of leather chemicals have been hampered by low valuations. BASF abandoned the sale of their leather and textile unit in March after offers fell short of the company’s valuation. Competition from low-cost producers in Asia is coinciding with a slowdown in demand in some markets for leather bags and shoes.

TFL has attracted interest from financial sponsors and difficulty in raising debt may lead to bids of less than €200 million if markets don’t improve, said a person familiar with the transaction, who declined to be named because the information is not public.

Leonardo already sent out a memo detailing the forthcoming auction of TFL, which stands for Together For Leather. The supplier of chemicals for leather is being sold on behalf of creditors seeking debt repayments taken on under the ownership of private equity firm Odewald Cie.

Other leather-chemical makers in Europe include Clariant, Lanxess and Stahl, who are owned by French buyout firm Wendel. Lanxess, which in July started work on a €30 million-euro leather chemicals plant in Changzhou, China, is an unlikely buyer now.

According to Business Week, TFL, based in Weil am Rhein, have suffered since Odewald saddled them with €65 million in debt, leading the company to break covenants in 2008, two people familiar with the matter said in September. Odewald bought TFL, which has annual sales of about €240 million, from Permira Advisers in 2003 for an undisclosed price.

Source: Bloomberg Business Week.

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