Report on Acquisition Financing for Environmental Technology Business

Transaction Overview

A definitive agreement has been reached for the private equity firm Stellex Capital Management LLC to acquire the environmental technology business from Dürr Systems AG and its subsidiaries. This strategic acquisition focuses on technologies critical for environmental protection, specifically in the areas of air pollution control and noise filtration. The transaction is currently subject to customary closing conditions and regulatory approvals. This investment underscores a commitment to advancing technologies that support sustainable industrial practices.

Financing Structure

UniCredit Bank GmbH has provided the acquisition financing, which was fully underwritten and subsequently syndicated and allocated to a consortium of institutional and bank lenders. The comprehensive financing package was structured to support the transaction and future operations, and includes the following components:

• Term Loan B Facility
• Term Loan C Facility
• Working Capital Credit Facilities
• Guarantee Facilities

Alignment with Sustainable Development Goals (SDGs)

This transaction directly supports and advances several United Nations Sustainable Development Goals (SDGs) by channeling capital into a business dedicated to mitigating industrial environmental impact.

1. SDG 3: Good Health and Well-being: By focusing on air pollution control and noise filtration, the acquired business develops technologies that reduce harmful pollutants and noise levels, contributing directly to healthier living environments and improved public well-being.
2. SDG 9: Industry, Innovation, and Infrastructure: The investment promotes the development and deployment of clean and environmentally sound technologies within the industrial sector. It supports the upgrading of infrastructure to make it more sustainable and resource-efficient.
3. SDG 11: Sustainable Cities and Communities: The air pollution control technologies are essential for reducing the environmental impact of industrial activities on urban and surrounding areas, helping to create safer and more resilient communities.
4. SDG 12: Responsible Consumption and Production: The business enables industrial producers to adopt more sustainable production patterns by significantly reducing air emissions and noise pollution, thereby minimizing their ecological footprint.
5. SDG 17: Partnerships for the Goals: This transaction exemplifies a multi-stakeholder partnership, bringing together a leading engineering company, a private equity firm, a major financial institution, and legal advisors to achieve a common sustainability objective.

Advisory Team

Latham & Watkins LLP provided legal counsel to UniCredit Bank GmbH on the financing. The advisory team comprised specialists across multiple practice areas:

• Finance:
  • Thomas Weitkamp (Partner, Munich)
  • Martina Eisgruber (Counsel, Munich)
  • Sibylle Münch (Partner, Frankfurt)
  • Noah Weiss (Partner, Chicago)
  • Johanna Woerle (Associate)
  • Michael David Harris (Associate)
  • Hiba Sheikh
• Corporate:
  • Stephan Hufnagel (Partner, Munich)
  • Corinna Freudenmacher (Associate)
• Tax:
  • Ulf Kieker (Partner, Munich)
  • Bora Bozkurt (Partner, New York)
  • Henning Kleymann (Associate)
  • Farrah Yan (Associate)

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 3: Good Health and Well-being: The article mentions that the acquired business focuses on “air pollution control and noise filtration.” Reducing air and noise pollution directly contributes to better public health by lowering the incidence of respiratory illnesses, cardiovascular problems, and stress-related conditions caused by environmental factors.
• SDG 9: Industry, Innovation and Infrastructure: The financing and acquisition of an environmental technology business represent an investment in sustainable industrial processes. This supports the goal of upgrading industries to be more sustainable by adopting cleaner, environmentally sound technologies like those for air pollution control.
• SDG 11: Sustainable Cities and Communities: Air and noise pollution are significant challenges in urban areas. Technologies for air pollution control and noise filtration are crucial for making cities and human settlements more inclusive, safe, resilient, and sustainable by improving the quality of the urban environment.
• SDG 12: Responsible Consumption and Production: The core function of the acquired business—air pollution control—is directly linked to ensuring sustainable production patterns. By controlling pollutants released into the air from industrial processes, these technologies help minimize the adverse environmental and health impacts of production.

2. What specific targets under those SDGs can be identified based on the article’s content?

• Target 3.9: By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination. The business’s focus on “air pollution control” directly supports this target by providing the technology needed to reduce harmful emissions.
• Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes. The acquisition and financing of an “environmental technology business” is a direct investment in the type of clean technology this target promotes.
• Target 11.6: By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality. The deployment of air pollution control and noise filtration systems in urban and industrial areas is a key strategy for achieving this target.
• Target 12.4: By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in order to minimize their adverse impacts on human health and the environment. The “air pollution control” technologies mentioned are fundamental to reducing the release of pollutants into the air from industrial sources.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article does not mention any explicit quantitative indicators to measure progress. As a report on a financial transaction, its focus is on the deal itself rather than its environmental impact metrics. However, the nature of the business being acquired implies the relevance of several official SDG indicators. Progress resulting from the application of these technologies could be measured by:

• Implied Indicator for Target 3.9: Mortality rate attributed to household and ambient air pollution (Indicator 3.9.1). The successful implementation of the company’s technology would contribute to a reduction in this rate.
• Implied Indicator for Target 9.4: CO2 emission per unit of value added (Indicator 9.4.1). While not explicitly about CO2, air pollution control technologies are part of the broader effort to create cleaner, more efficient, and less carbon-intensive industrial processes. The investment itself can be seen as a financial flow towards sustainable industry.
• Implied Indicator for Target 11.6: Annual mean levels of fine particulate matter (e.g., PM2.5) in cities (Indicator 11.6.2). The use of the acquired company’s air pollution control systems would directly lead to lower levels of particulate matter and other pollutants in urban areas.

4. Summary Table of SDGs, Targets, and Indicators

Source: lw.com