Metro GlassTech writes off $179.1M as lenders take control

Wednesday 29th February 2012

Metro GlassTech, the building glass manufacturer, wrote off $179.1 million as debts mounted, prompting its lenders to take over the company.

The Auckland-based company’s creditors enforced security held over MetroGlassTech’s debt, forcing a restructure and transfer of the business to them on Jan. 31, according to an Overseas Investment Office approval summary published today.

The write-down in the company’s value gave it an enterprise value of $180 million, less than half the $366.2 million paid by Australian equity firm Catalyst Investment Managers in 2006.

Metro GlassTech posted a loss of $200.9 million in the 12 months ended March 31, widening the loss of $48 million a year earlier, due to the impairment charge against goodwill, according to holding company NZ Glass Holding’s financial statements lodged with the Companies Office yesterday.

“The restructure of the company’s shareholdings and capital structure was necessitated by a continuation of the downturn in residential new build market which has endured since mid 2008,” directors Trent Peterson and Andrew Bailey said in their report. “The board and its shareholders have cooperated with other stakeholders in relation to the transition to the new investors to ensure there was no unnecessary value destruction.”

As part of the restructure, the company’s lenders gave up “a large portion of their debt obligations in return for a majority equity stake,” the directors said.

As at March 31 last year, Metro GlassTech had $286.4 million in bank debt coming due in less than a year, and net debt of $280.9 million. That gave it a gearing ratio of 181.8 percent. It paid $33.3 million in finance costs in the 2011 financial year, down from $40.1 million in 2010.

The new owners have poured the glass manufacturer into a new holding company called MF (Finco). The group includes Australian private equity firm Crescent Capital, JP Morgan, Germany’s WestLB, Bain Capital’s Sankaty Credit Opportunities fund, among others.

As part of the deal, Metro GlassTech’s board resigned, though the management team was retained to operate the business.

“The board is confident that Metro GlassTech is well positioned to recover in-line with an improvement in the residential building market in due course, as well as the rebuild of the Christchurch region,” the directors said.

Government figures today showed the issuance of new building consents rose 8.3 percent last month, primarily off a pick-up in demand for retirement units in Canterbury.

Last week, the company’s rivals Viridian New Zealand and Euroglass Systems entered into a joint venture in a bid to cut costs and clamp down on spare capacity in the sector.

BusinessDesk.co.nz

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