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Krokus backs a management buy-out of LOTOS Parafiny in Poland

A private equity fund managed by Krokus Private Equity has backed a management buy-out of LOTOS Parafiny in a leveraged acquisition. The Company will continue its business under the new name – POLWAX.

The transaction entailed the purchase of 100% of shares of the subsidiary from the LOTOS Group. Currently, Lotos Parafiny is owned through a special purpose vehicle Krokus Chem Sp z o o by the Fund Nova Polonia Natexis II and the managing team.

“It was an unprecedented decision for the LOTOS Group as well as for the management team of LOTOS Parafiny. The investment process was very complicated but it was worth it. We are motivated, have clear vision for further development of the company. Anticipating the financial support of the Fund, we are optimistic about the future.” says Dominik Tomczyk, the Chief Executive of LOTOS Parafiny.

“This is an investment into an industry leader with a stable business and a strong cash generation capability. Management is experienced and has a convincing development strategy aimed at entering new markets and development of new innovative products,” says Witold Radwański (pictured), President and Managing Partner of Krokus PE Sp z o o.

LOTOS Parafiny is the largest Polish and one of the leading European producers and distributors of the refined paraffin masses and as well as significant manufacturer of candles. The Company’s production facilities comprise two plants located in Jaslo and Czechowice-Dziedzice (both in southern Poland). Revenues for 2011 amounted to PLN 270m.

As a subsidiary of the LOTOS Group the Company has gained valuable knowhow that allowed to develop effective production processes and to diversify its range of products. Paraffin products are applied in various industries, such as: wood processing, textile and paper production, food processing, fertilizers and others. Using the findings of its own R&D department, LOTOS Parafiny focuses on development of innovative products for other industrial applications, and expanding into new markets.

The divestment transaction results from the strategy of the LOTOS Group, which aims at focusing on its core activities (fuel production) and disposing of non-core assets.

Krokus PE manages Nova Polonia Natexis II, a EUR100m private equity fund which invests in Polish mid-cap companies. The Fund provides development capital for expansion as well as finances buy-outs. NPN II is the fourth Fund managed by Krokus Private Equity.

The advisors of the LOTOS Group in the transaction were: Espirito Santo Investment Bank and CMS Cameron McKenna.

On the buy side LOTOS Parafiny was advised by: BTFG Advisory and Gessel, Koziorowski Attorneys at Law.

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