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Italian Coffee Machine Maker Nears Debt Deal

(Bloomberg) -- Italian coffee machine maker Caffitaly System SpA is nearing a debt restructuring agreement, involving new money from shareholders and a haircut on its bank debt. 

The company is ironing out the final details of the deal, which should see nearly €40 million ($42 million) of fresh cash from its owners — private equity fund Alpha Group and investment holding company Compagnie Nationale a Portefeuille, according to people with knowledge of the matter.

Meanwhile, banks led by BNP Paribas SA will convert around half of their €150 million exposure into equity-like instruments to lighten the debt load, the people said, speaking on condition of anonymity. Alternative credit investor Polus Capital Management is also exposed to Caffitaly’s bank debt, having bought it in recent months at a discount, the people said. 

Caffitaly has been struggling in recent years, with a loss of €4 million in 2022. The firm, which also makes coffee capsules, has suffered from a rise in raw material costs following the war in Ukraine. Greater competition in Italy and the breakage of a factory roasting machine also hit profits and weighed on operations in 2023. 

Spokespeople for Caffitaly, Alpha and Polus declined to comment. Representatives of CNP and BNP didn’t immediately respond to a request for comment.   

The company had previously asked its advisers at Houlihan Lokey Inc. to look for potential third-party funding before focusing on a solution within its existing stakeholder base. 

The company was pushed into debt restructuring talks as most of its bank loans were due in October. At the end of last month, a court in Bologna granted Caffitaly an extension to protection from creditors through to Dec. 2, according to a filing seen by Bloomberg News. 

©2024 Bloomberg L.P.