Scholz Bonds Jump on $1.3 Billion Restructuring Deal With Banks

Bonds of Scholz AG jumped to the highest in six weeks after the German metals recycler reached a restructuring agreement with banks.

The company’s 182.5 million euros ($242 million) of 8.5 percent senior unsecured notes due March 2017 rose about 9 cents to 85 cents on the euro, the highest since Aug. 1, at 1:05 p.m. in London, according to data compiled by Bloomberg.

Scholz agreed to reduce debt to about 700 million euros from 1 billion euros by selling its stainless steel and aluminum units, according to a Sept. 12 statement from the Essingen, Germany-based firm. The lenders provided a 40 million-euro credit line to fund its operations and to pay restructuring costs.

Scholz, which reported a drop in sales and earnings in May, forecasts a loss for 2013 and said it may be necessary to raise cash by selling shares to new investors. It appointed Rothschild to offload the two units, it said in the statement.

The closely held company obtained a 500 million-euro senior secured syndicated loan last year arranged by Bayerische Landesbank, Commerzbank AG, Landesbank Baden-Wuerttemberg and Norddeutsche Landesbank Girozentrale, according to data compiled by Bloomberg. It raised more than 650 million euros of other loans at the same time, lenders said. The bonds were sold to investors in March 2012, the data show.

To contact the reporter on this story: Julie Miecamp in London at jmiecamp@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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