The Deal – MatlinPatterson rescues Heros
By Andrew Bulkeley, April 12, 2006

New York distressed asset specialist MatlinPatterson Global Advisors LLC on Monday, Feb. 10, stepped in to rescue armored car operator Heros Verwaltungs GmbH after a €300 million ($363 million) embezzlement forced the German company to seek protection from creditors in February.

MatlinPatterson plans to keep 3,000 of Heros’ original 4,600 employees and will inject fresh capital into the scandal-plagued group, according to insolvency administrator Brinkmann & Partner.

“To regain the company’s position on the German market and realize future growth potential, the company needs a strong and long-term investor,” said Mark Patterson, one of the founders of MatlinPatterson, in a statement.

Hero is Germany’s biggest armored car company.

The high-profile bankruptcy early this year led to fears Europe’s largest economy would suffer from a cash crisis if Heros trucks failed to make their daily rounds. The company’s employees deliver some €600 million each day to the country’s biggest retailers and banks, including KarstadtQuelle AG and Commerzbank AG.

But it was these same customers that noticed inconsistencies with the company’s deliveries and tipped off authorities. Heros founder and chief executive Karl-Heinz Weis and three other managers are now behind bars and Weis reportedly recently admitted tapping the company’s books for personal gain and to help prop up operations.

Competitors have complained in the German press that Heros used predatory pricing to crush competitors before orchestrating takeovers to expand its business. Late last year the company picked up the German cash-handling business of Sweden’s Securitas AB. Although no price was given in that deal, Securitas said the unit had sales of €62 million.

The administrator, Brinkmann’s Thorsten Bieg, said the company would receive a new name, and employees laid off in the deal would be transferred to an employment agency to ensure the money-delivery group has access to trained personnel should it require additional staff.