What's going on with Wittur?

In spring, an article in the German magazine "Finance" caused a stir in the lift industry. "It's five to twelve at Wittur: Moody's has downgraded the lift parts supplier's rating by two notches from Caa1 to Caa3," it said.

Then, a few weeks ago, it was announced that Bain Capital's had recently transferred ownership of German manufacturer Wittur to KKR's credit arm. LIFTjournal asked Wittur CEO Tom Stephenson about this.

Bain Capital previously took over the Wittur Group, and now KKR, based in New York, has joined. So, is Bain Capital out and KKR now in?
Stephenson: When the deal closes, KKR will become the main shareholder and Bain Capital will retain a minority interest in the business.

A few months ago, Moody's "downgraded" Wittur by two notches from Caa1 to Caa3 … What’s going on with Wittur?
Stephenson: Let me give a bit of background on that. Over the last six months we’ve been focused on securing a recapitalization. The Wittur group had roughly EUR 900 million in debt. That debt level was fine in calm waters, but we have been through a storm.

Tom Stephenson, Wittur-CEO. Photo: © Wittur

There are two things that have changed: The first is that the Chinese construction market has dropped enormously; you will see that reflected in all the multinational elevator company reports. Since we are a multinational supplier, our revenues have fallen significantly, driven by this market change. The second is the significant rise in interest rates. Over the last nine months interest rates have increased from 0 to about 3.5%. That makes a big difference when you have EUR 900 million in debt. As a result of that, Moody’s and other rating agencies de-rated our bonds.

The current rating came before the recapitalization, but as that has shown, all of our lenders and equity holders are very supportive of the company. We would expect to be re-rated once the recapitalization is completed.

The recapitalization of the balance sheet is close to completion. We have about EUR 900 million in debt and when the recapitalisation closes in c. Q4 2023, we will have about EUR 400 million in debt, a EUR 500 million deleveraging, which is fantastic for the company.

What are the consequences and what future prospects does this open up for Wittur?
Stephenson: It will leave Wittur with one of the strongest balance sheets in the industry. That’s really good news for the company, for our customers and for our suppliers. KKR will become the sole shareholder converting debt into equity. We’re very lucky because KKR are an extremely large and sophisticated financial investment house – very similar to Bain Capital.

CEO Tom Stephenson at a meeting from Wittur Slovakia. Photo: © Wittur

They bring with them enormous expertise and financial muscle. We've gone from one strong sponsor with Bain Capital to another one in KKR. The other EUR 250 million of first lien debt has been moved off balance sheet and reinstated above operating group level with its maturity extended by two years.

From Wittur’s perspective, yes, we have changed owners, but we have moved from one strong owner to another. We will end up with one of the strongest balance sheets in the industry. I can't tell you how excited I am because it is such a fundamentally positive change, and it puts us in a really strong position to continue to grow the business.

Can you tell us more about the recapitalization of the balance sheet? What are the goals of KKR with Wittur, why are they buying?
Stephenson: What they are looking to do is to make a good return on their investment. So, the goal is to stabilize the balance sheet of a good business and facilitate ongoing profitable growth. From a strategic perspective, they support Wittur’s strategy, to advance in the industry, gain market share in all areas, with a focus on customer centricity, product leadership and operational excellence. This is a continuation of our current strategy, but we now have the resources to go faster.

We have some fantastic new products we are launching at interlift. Behind the scenes we have continued to work on our product platforms, factories, invest in our operational systems and automation. Thanks to the recapitalization, these investments are going faster now because we are fully funded as a business.

The interview was conducted by Ulrike Lotze and Bernd Lorenz.

More information: wittur.com