Building better businesses - Permira

Defending
the portfolio
Throughout the year portfolio company
management teams took the action
necessary to manage or mitigate the
effects of the recession, adapting business
strategies to fit the new environment.
All portfolio companies maintained a
relentless focus on cost efficiency but without
compromising their long-term prospects or
competitive position.
In addition, management teams closely
monitored the stability of capital structures
throughout the year, and where appropriate
took action to reduce the level of debt at
portfolio level. This was achieved successfully
in a number of companies such as Freescale
Semiconductor (page 50) and Hugo Boss
and Valentino (page 54) which carried out
full-scale financial restructurings while Galaxy
Entertainment Group (page 52) implemented
a debt buy-back programme. In Permira IV
alone, debt was reduced by €2.5 billion.
BorsodChem (page 42) also took substantial
steps to strengthen its financial position.
Starting in Q4 2008 the business experienced
an unprecedented drop in revenue, driven
by a collapse in end-market demand.
In response the business carried out a financial
restructuring, giving the business flexibility
and a solid platform for long-term growth.
The restructuring was carried out in partnership
with Wanhua Industrial Group, and leaves the
business well placed to move forward as the
global economy recovers.
Restructuring talks between lenders and
shareholders have taken place throughout the
year at Gala Coral (PE3) to adapt the capital
structure to a very challenging economic
environment. These discussions ended in May
2010 and resulted in a change of ownership
of the business. Permira Europe III (2003)
has already returned significantly more than
committed capital to investors and still has
considerable unrealised value left to be
returned to investors in the coming years.
The defensive measures taken by portfolio
companies and the actions taken to position
them for long-term growth will enable the
Permira funds to continue to deliver strong
returns to investors in the years ahead.
Permira Annual Review 2009 Year in Review 19