STARK- NEW ISSUE COMMENT
Stark Group, a B2B building products distributor in the Nordics, is marketing €515m of 6Y senior secured fixed- and floating-rate notes, the proceeds from which will be used to fund the LBO of Stark by private equity firm Lone Star. With a purchase price of €1bn or a relatively high 9.8x pro forma EBITDA, and pro forma net reported leverage at 4.4x, the
LBO leaves significant equity cushion. That said, the issuance of €100m PIK toggle notes as part of the shareholder funding makes the deal more aggressive than it might appear,
even though they are issued in a parent entity outside of the restricted group, and are deeply subordinated.
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