Italian Firms Seek Workaround to Tap Private Credit’s Billions
- Borrower-friendly laws have typically hindered direct lenders
- New tool seeks to shift potential default risk to Luxembourg
For years, Italy’s borrower-friendly debt-restructuring laws have limited its companies from accessing billions of euros of capital that’s readily available to their peers elsewhere on the continent. That may be starting to change thanks to a complex workaround tested on one of the country’s biggest direct lending deals last year.
The mechanism shifts the legal fallout from a potential default to Luxembourg, where it’s easier for a private lender to quickly take over and turn around a struggling company. It was used last year when Intermediate Capital Group Plc, Apollo Global Management and JPMorgan Chase & Co. lent €700 million ($762 million) to textile manufacturer Gruppo Florence to fund its buyout by Permira, according to people familiar with the deal structure, who spoke to Bloomberg on condition of anonymity. It’s now gaining traction and may be on the table for upcoming deals, the people said.