Hedge Fund Owners of Europcar to Double Their Money With VW Deal
By Irene García Pérez
(Bloomberg) — Hedge funds that took control of Europcar
Mobility Group in a complex debt restructuring earlier this year
are set to cash in more than twice the amount they invested
after Volkswagen AG agreed to buy the company.
A group of five funds led by Anchorage Capital Group bought
most of the 1.1 billion euros ($1.3 billion) of the French car
rental company’s unsecured debt at as low as 40% of face value
after the pandemic brought international travel to a halt in
2020. Their investment, after a swap of debt into equity
completed in February, at least doubled as the funds’ 60% stake
was valued more than 1.5 billion euros by the German carmaker
last week.
“For the funds that took part in the restructuring, it is a
great business,” said Mateo Salcedo, a credit analyst at Spread
Research-Qivalio Group. “They got a high valuation due to the
good moment the industry is going through, and the acquisition
removes the uncertainty of what’s going to happen with the
travel industry in 2022.”

Windfall

Volkswagen teamed up with hedge fund Attestor — another
major creditor that became a shareholder as a result of the
restructuring — and Dutch mobility provider Pon Holdings to
offer 2.5 billion euros as the French company slashed net losses
in the first half of the year after it cut costs and travel
rebounded in the U.S. and Europe. The car rental firm also
benefited from weaker competition and delays in delivery of new
vehicles, according to its latest earnings report.
Read more: VW Buying Europcar for $3 Billion to Boost
Mobility Services
Marathon Asset Management, Diameter Capital Partners and
King Street Capital Management were also among the main
investors that bought debt at a discount last year. The exact
profit made by each fund depends on the timing of their
investment and their contribution to the capital raise. Attestor
will tender the company’s shares it holds and reinvest the
proceeds with additional cash alongside Volkswagen and Pon.
Representatives for Anchorage, Attestor, Marathon and King
Street declined to comment. Spokespeople for Europcar and
Diameter did not reply to calls and emails seeking comment.
Europcar agreed on a major restructuring in November. The
deal included the conversion of 1.1 billion euros of debt into
equity, and an additional equity injection of 250 million euros,
which was mostly provided by creditors.