Airopack’s debt revamp collapses, cites accounting issues By Reuters

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© Reuters. FILE PHOTO: Leon Black, Chairman, CEO and Director, Apollo Global Management, LLC, speaks at the Milken Institute


© Reuters. FILE PHOTO: Leon Black, Chairman, CEO and Director, Apollo Global Management, LLC, speaks at the Milken Institute’s 21st Global Conference in Beverly Hills

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By John Miller

ZURICH (Reuters) – Airopack’s (S:) recapitalization plan collapsed as lenders including Apollo Global Management (N:) demanded repayment following the discovery of “inadequate sales and accounting practices”, the Swiss aerosol packaging maker said on Monday.

Shares in the company, which makes plastic aerosol dispensers for Procter & Gamble’s (N:) Gillette shaving cream, fell as much as 60 percent and have lost almost all their value since hitting 13.5 Swiss francs ($13.46) three years ago.

Airopack, whose net loss topped 40 million euros ($45.3 million) in 2017, has been seeking to slash debt via a recapitalization plan announced on Nov. 30.

Its largest lender, U.S.-based private equity firm Apollo (N:), was to have received a controlling share in the deal.

But developments since then, including the discovery of what Airopack described as “excessively overstated” sales forecasts by former managers, now make the recapitalization plan “completely unachievable”.

Airopack’s lenders, including Apollo and a major bank, on Saturday demanded repayment of loans in excess of $100 million.

Airopack said it would seek a short period of debt relief with Swiss courts in order to gain breathing room, negotiate with lenders and seek to avoid bankruptcy proceedings.

An Airopack spokeswoman said a court in Zug, near the company’s headquarters in Baar, would consider the request. There was no projected deadline for a decision.

The company said its major lenders did agree to extend a 15 million euro loan, with a possibility of 10 million more, to keep operating units afloat in the short- and mid-term.

An Apollo spokesman in London did not immediately comment.

Problems intensified as Airopack merged its manufacturing at a new plant in 2017, taking on more and more debt from Apollo to help keep things running. Production of aerosols trailed expectations, however, as it tripled employees to 180 last year.

Financing costs escalated and losses ballooned, requiring the recapitalization deal that collapsed amid rising concerns over accounting practices.

Airopack said that in addition to inflated sales forecasts, a review started by PriceWaterhouseCoopers in December found “certain inadequate sales and accounting practices that will lead to corrections in the accounting and caused a severe lack of cost-control in the months prior to the announced recapitalization plan”.

The board “is preparing the adequate procedural steps against former management and will coordinate such steps with the court-appointed administrator”, the company said.

It did not provide contact details for Airopack co-founder Quint Kelders, who resigned as CEO last year as the recapitalization plan was announced. He could not immediately be reached for comment via email and LinkedIn (NYSE:).

Kelders’s family owns 30 percent of Airopack, while Apollo controls about 23 percent of shares.

($1 = 1.0029 Swiss francs)

($1 = 0.8827 euros)

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