Carlyle, Unison Capital-backed Covalent Materials avoids bond default


Covalent Materials, the Japanese chip company backed by global buyout giant Carlyle and local private equity firm Unison Capital, has avoided a default after agreeing to buy back some of its securities from bondholders.

The struggling company’s bondholders have approved a proposal that involves a combination of buying back the outstanding bonds and extending their maturity in return for higher coupons, Covalent said in a statement.

Covalent, which was bought by Carlyle and Unison in 2006 from Toshiba Corp, said in July that it did not have enough money to repay JPY53.3bn ($682m) in bonds maturing in February and was subsequently looking to extend the maturity date.

Carlyle held a 45.6 per cent stake in Covalent and Unison a 47.5 per cent stake at the end of March.

The business has recently struggled to maintain profitability as the price of chips has fallen due to weak demand, which has also affected Japanese chip companies Elpida Memory and Renesas.

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