Betancourt group has been carried out by Alfredo Betancourt from 1950 when it was founded.   The group can be divided into three businesses: the hotel business, the property development business and the airline part (from 90s). In the 2003, Carlos Betancourt take over the management and after a modernizing period, decided to sell part of the company.
The proposed transaction was a leveraged buyout (LBO) to the hotel and airline business (both with capacity for leveraging) which were valued at €288 million.
The two venture capital firms, 9xi and FMG, would take control of the group by creating an SPV which will buy 85% the shares of BG. According with its plan, Betancourt family would hold a 15% of the company shares as investment and Carlos would stay on as general manager. Nevertheless, a merger between BG and the SPV is expected in a year time.
Both private equity firms have a well-know reputation on improving the internal functioning of the companies that they acquired. 85% of the total outstanding shares will give to the SPV the control of the group.
The future strategy seems to be achievable in order to produce large capital gains on the investment made. Progressive opening of new hotels, renting of new aircraft (private jet business), new cost control systems, strategic alliances are the main actions to be taken.
Taking a closer look to the terms and conditions of the loan, Bank London Investment is required to grant 165 million on the following conditions:
  1. Acquisition loan of €110 million undertaken by SPV (amortizing on 8 yrs).
  2. Refinancing loan of €25 million undertaken by Betancourt (Bullet on 8 yrs).
  3. Credit account of €30 million will fund the operational needs (bullet on 8 yrs).

Under the contract conditions, SPV will be liable, jointly and severally, for all obligations of the borrowers arising out of the financing arrangement. Betancourt SL will be liable for the obligations from the refinancing and revolving credit....

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