Deutsche Bank won an £8.5 million ($15.6 million) auction of U.K.-based Polestar Group's pro rata bank debt last week. Traders said the price was around 82 1/2-83. The seller of the debt could not be determined and a Deutsche Bank trader declined comment.
Polestar is a magazine printing company that is owned by private-equity firm Investcorp. The company was forced to restructure three years ago due to an inappropriate capital structure, said a European-based investor.
Most companies going through a restructuring only do enough to get through the next level and this company continues to have problems, he added. Polestar's pro rata debt has traded since the restructuring process started, but previously changed hands in the mid-to-high 70s and low 80s.
The buyers of the debt are betting on the company and the multiples recovering as the economy picks up, and one banker said the outlook is better. "The name was lower months ago," he said. Now some investors believe the paper could even be taken out with a refinancing at par. Peter Johnston, finance director at Polestar, and an Investcorp spokesman declined comment