Case Summaries · Stressed credits

Arxada: to get an A&E over the line, sponsors throw the SUNs a bone

Arxada extended all of its scheme debt by about three years at par, backed by CHF 200m of new money from Bain Capital and Cinven. The senior unsecured noteholders held out until June, when the sponsor money was moved to rank alongside them. The scheme was sanctioned on 15 September and the deal closed on 30 September.

By EURx · 5 October 2026

How we got here: a sponsor-backed LBO, then demand troughed

In February 2021, Lonza agreed to sell its Specialty Ingredients division to Bain and Cinven at an enterprise value of CHF 4.2bn,¹ or about 13x 2020 EBITDA.² Its main business was microbial control: chemicals that kill or control bacteria and viruses, used in disinfectants, preservatives, sanitisers, personal care products and coatings. It also made specialty chemicals and composites to order for electronics, aerospace, food and agrochemical customers, with about 2,800 staff across 17 plants.¹³ The buyout was funded under a senior facilities agreement dated 14 May 2021, plus secured and unsecured sustainability-linked notes.⁴

Sources: Company (convening skeleton, 27 July 2026; investor presentation, 12 May 2026); Bloomberg. Notes are sustainability-linked.

The SFA lenders and the secured notes share one first-ranking security package. The unsecured notes sit at Herens Midco behind them under the intercreditor agreement, with a separate security package and second-lien pledges.⁴

Bain and Cinven’s case for the deal was that microbial control would keep growing, helped by tighter regulation and more demand for hygiene, and that Arxada could be a platform for bolt-on deals in a fragmented market.³ Instead, demand fell after COVID as customers worked through the extra inventory they had built up during the pandemic, and stayed weak through 2025 and early 2026, especially in end markets linked to North American residential construction. Trade policy and Middle East tensions added to the pressure.⁴¹⁷ Bloomberg tied the timing to wider stress across chemicals from higher energy prices and weak demand.⁵

Leverage (not liquidity) was the trigger here

Despite the challenges to the business, the company said it probably had the cash to deal with its January 2028 RCF maturity.¹⁷ Liquidity was still above CHF 200m at the end of the first quarter of 2026, but the company’s own numbers put 2025 total net leverage at 8.4x on CHF 373m of EBITDA.⁶ Management later said its absolute leverage was too high to refinance in current markets, which made a distressed M&A process the most likely outcome without a deal.⁴¹⁷ With the term loan and secured notes also due in 2028, something needed to happen in 2027. The company called the transaction “a proactive step” taken “well ahead of maturities”.⁷

The SUNs rise

9fin reported on 22 April that a group of SUN holders (Alchemy, Rokos and Hudson Bay) had signed a cooperation agreement ahead of an expected proposal.⁸ The transaction support agreement is dated 25 April, and Bloomberg reported on 27 April that it had been signed with “a group of senior secured lenders” (none named or ever made public).⁵

A&E launches; SUNs left behind?

Arxada launched its A&E publicly on 12 May. Bain and Cinven agreed to commit CHF 200m of new money, junior to the secureds, to pay down the RCF. The launch release did not say where the money ranked against the SUNs, but given the fact pattern the market assumed this was a plan to cram them down (more on that below).⁷ Maturities were to be extended by about three years (2031 for the secureds and 2032 for the SUNs) at par, with lenders eligible for a 25bps early bird fee and 25bps consent fee. Cash margins and coupons stayed the same. The secureds would get an extra PIK margin of 0% to 1% on a leverage ratchet (1% if the term loans are rated CCC or below) and a duration fee of 0.50% to 1.25% on principal repaid from 30 June 2029. The SUNs would get a PIK toggle at the cash interest rate plus 50bps. About 62% of the secureds and 20% of the SUNs had signed up at launch. The long stop date was 31 October 2026.⁶⁷

A fully consensual deal needed every SFA lender plus 90% of the secured notes and 90% of each unsecured series. A scheme needed 75% of the secureds. If the SUNs stayed below 75%, the company pointed to “alternative implementation options”.⁷

The market read the initial A&E proposal as essentially a plan to cram down the SUNs,⁹ pointing to super senior baskets, no J.Crew blocker on dropdowns and no Serta blocker, i.e. the intercreditor agreement could be amended to subordinate the notes with majority consent.¹⁰ In its cleansing presentation to lenders from 12 May, Arxada included a Pfleiderer-style anti-LME protection, which 9fin said appeared to be a first for a European deal.¹¹ The presentation also listed Omni, J.Crew (with Pfleiderer protections), Envision, Chewy and Serta blockers, plus tighter covenants and baskets.⁶ The majority of SUNs held out for better terms.

The SUNs finally set and the sponsor throws a bone

Despite their objections, the threat by the sponsors of more coercive implementation routes is likely what brought the SUNs back to the negotiating table.¹⁰ On 22 June the company announced an agreement in principle with a group holding more than 75% of the fixed and floating rate SUNs, along with “a limited number of updates” to the TSA.¹² To get the deal over the line, the sponsor threw in its own concession; the CHF 200m now ranked pari passu with the SUNs, paid PIK interest at no more than the SUN coupon and matured with the SUNs. Fee deadlines for SUN and RCF holders were reopened to 26 June.¹³

The convening hearing was on 27 July and the creditor meetings on 27 August.¹⁴ In the secured class, 82.6% by value turned up and 97.2% voted for, with the rest abstaining. In the SUN class, 96.2% turned up and 99.8% voted for.⁴ The scheme was sanctioned on 15 September with no opposition.¹⁵ The deal closed on 30 September.¹⁶

Extended cap structure

Sources: Company (convening skeleton, 27 July 2026; investor presentation, 12 May 2026; releases¹²¹⁵); Bloomberg. Principal includes capitalised early bird and consent premiums. Sponsor money PIKs at no more than the SUN coupon. Prices indicative, data as of 5 October 2026.

Current trading

Indicative trading levels as of 5 October: $ 4.75% SSNs 83c, € 5.25% SUNs in the high 60s and the € term loan around 97c (source: Bloomberg).

All eyes now on earnings recovery

The company’s plan has EBITDA rising from CHF 373m in 2025 to CHF 502m in 2028, which would take total net leverage from 8.4x to 5.8x.⁶ With nothing due before 2031, we are watching how quickly earnings recover with North American construction and whether the SUN PIK toggle gets used.

Sources

This summary relies on company releases, court filings and press coverage. We have not used any non-public material.

1. Lonza, agreement to divest Specialty Ingredients, 8 February 2021 link
2. IAM Independent Asset Management, February 2021 link
3. Bain Capital and Cinven, agreement to acquire Lonza Specialty Ingredients, 8 February 2021 link
4. ION Analytics (Debtwire), scheme sanctioned by the English High Court, 15 September 2026 link
5. Bloomberg, 27 April 2026 link
6. Company: Herens Topco S.à r.l. (Arxada), investor update and cleansing presentation to lenders, 12 May 2026
7. Arxada, signing of a support agreement, 12 May 2026 link
8. 9fin, SUN holders sign co-op, 22 April 2026 link
9. TipRanks summary of 9fin’s coverage, 27 May 2026 link
10. M&G Bond Vigilantes, 7 July 2026 link
11. 9fin, Pfleiderer protections, 20 May 2026 link
12. Arxada, update on the A&E transaction, 22 June 2026 link
13. Arxada, update on the TSA, 24 June 2026 link
14. Arxada, explanatory statement posted, 28 July 2026 link
15. Arxada, sanction of the scheme, 17 September 2026 link
16. Arxada, completion, 30 September 2026 link
17. Herens UK Bidco Limited, skeleton argument for the convening hearing, High Court of England and Wales, CR-2026-004090, 27 July 2026