Loparex: Peeling Under Pressure

Welcome to the 195th Pari Passu newsletter.

In today’s edition, we’re covering Loparex, one of the world’s leading independent manufacturers of release liners, the protective backings you peel off stickers, Band-Aids, and shopping labels. The 120-year-old company, which traces its origins to a 1906 Finnish pulp mill, was acquired by Pamplona Capital Management in 2019 and quickly rolled up with German specialty film producer Infiana Group. When customer destocking, a macroeconomic downturn, and an overleveraged capital structure collided in 2023, Loparex began burning through cash at an alarming rate. 

In March 2024, Loparex executed a non-pro-rata uptier backed by 75% of its first-lien lenders. As we’ll detail, Loparex’s LME was one of the most coercive exchanges of 2024, featuring a massive 35-cent gap between AHG and Non-AHG lenders and zero second-lien participation. The transaction also featured a geographic split, pitting a primarily US AHG against a European outgroup. Notably, just two years later, in January 2026, Loparex reportedly approached private credit investors for a comprehensive refinancing, and rumors from June seem to indicate that new lenders were not interested, leaving the company facing a tricky post-LME refinancing. 

In this writeup, we’ll walk through Loparex’s specialized release liner business model and extensive corporate history. We’ll then detail Pamplona’s acquisition, the Infiana bolt-on, and the rapid path to distress that followed. Afterwards, we’ll break down the mechanics of the March 2024 LME, detailing the coercive shift in value and negotiating dynamics at play. Lastly, we’ll examine the company’s post-LME trajectory, refinancing efforts, and looming 2027 maturity wall.

To understand Loparex’s story, it’s important to understand what release liners are, as most people have used one without ever thinking about it. 

Every time you peel the backing off a sticker, Band-Aid, or shipping label, you’re removing a release liner. At its core, a release liner is a paper or film substrate, coated with silicone or another release agent, that provides a temporary, non-stick surface for adhesive materials. The liner protects the adhesive during manufacturing, shipping, and storage, and is then peeled away and discarded at the point of use. Release liners are the classic “invisible” industrial product: essential to the manufacturing of thousands of end products but ultimately thrown away by consumers. 

The release liner market is estimated at $12-15bn globally, growing at roughly 4-5% annually, driven by tailwinds in e-commerce (shipping labels), healthcare, hygiene products, and industrial tapes [1]. The industry is dominated by both scaled, specialty producers and vertically integrated paper and film companies. 

Loparex differentiates itself as one of the few pure-play, independent release liner producers. While competitors like Avery Dennison and Mondi produce release liners as part of broader packaging or labeling offerings, Loparex’s entire business is built around release liner manufacturing. This specialization gives the company breadth across various release liner types and coating formulations, enabling it to serve customers as a one-stop release liner solution. 

Release liner manufacturing is inherently capital-intensive, as production lines require significant upfront investment and upkeep. Loparex’s manufacturing footprint spans 11 plants across four continents, four of which are located in the United States. Loparex operates its own direct sales force, which accounts for 85% of revenue, and allows the company to maintain technical relationships with customers. Multi-year take-or-pay contracts provide the company with a recurring revenue source, but an exact mix of contracted vs spot volume is not disclosed. For certain end markets, such as healthcare, qualification and regulatory processes are time-consuming and expensive, meaning once Loparex is designed into a customer’s product, it becomes difficult to switch suppliers. 

One of the biggest risks facing Loparex is end-market cyclicality. Approximately 65% of Loparex’s business is tied to economically sensitive end markets. 43% of this exposure alone comes from construction or construction-adjacent end markets such as HVAC, insulation, etc. [2]. During an end-market cyclical downturn, which is entirely out of the company’s control, it may be overexposed to volume drops due to its high fixed cost base. 

Loparex traces its origins to 1906, when entrepreneur Hjalmar Linder established a sulphate pulp mill in Lohja, Finland, creating Loja Cellulosa-fabriks Ab [3]. The mill was the first industrial plant in the town and played a foundational role in the local economy. After Linder sold the business in the 1920s, it passed through several ownership changes before landing with the Haarla family in 1929, and eventually becoming a subsidiary of Finnish paper conglomerate Joutseno Pulp in 1968. By this time, the company was known as Lohjan Paperi.

The company’s biggest historical transformation came in 1971, when Lohjan Paperi became one of the first Finnish companies to begin silicone-coating operations, shifting its identity from a basic paper producer to a specialty release liner manufacturer. Less than a decade later, by 1979, pulp production was shut down entirely as the company fully committed to releasing liners [4]. 

Over the following decades, Lohjan Paperi pursued an acquisition-led international expansion strategy. In 1985, the company acquired UK-based Sterling Coated Materials, establishing a European siliconizing footprint outside Finland. By 1996, Lohjan Paperi had been absorbed into the Finnish paper giant UPM-Kymmene through a series of Nordic forest-industry consolidations. Within UPM, the business sat inside the Converting Division, representing a small specialty unit within a €10 billion paper and packaging conglomerate. In 1998, it entered the U.S. market by acquiring the release paper and consumer products business of Chicago-based Daubert Industries. Then, in 2001, the company, under UPM ownership, completed its biggest deal, acquiring Rexam's siliconizing division, Rexam Release. Rexam was a London-headquartered consumer packaging conglomerate, with a specialized siliconing presence in the US, including a plant in Eden, North Carolina. The combined entity was rebranded as "Loparex", reflecting the combination of Lohjan Paperi and Rexam, and positioned itself as a dedicated, global release liner platform.

In 2005, UPM divested Loparex as part of a broader restructuring to focus on pressure-sensitive labels, RFID, and packaging. The buyer was Mountaintop Investment, the investment unit of ABN AMRO, one of the Netherlands’ largest full-service banks, which paid approximately €230mm for the business [3]. At the time, Loparex held a 21% share of the global release liner market, operated nine production facilities, and generated roughly €337mm in annual revenue. Under ABN AMRO’s ownership, the company continued its consolidation strategy, acquiring the Douglas-Hanson Company of Hammond, Wisconsin, a U.S. manufacturer of silicone-coated release papers, furthering its U.S. expansion. However, in later years, to rationalize its footprint, the company would divest most of its European operations, including the original Lohja facility, along with a facility in Thailand, to its competitor Mondi. Following the divestiture, pro forma revenue was approximately €270mm with roughly 1,100 employees [16]. Additionally, the company’s primary markets shifted decisively toward North America and the Netherlands, where the company’s last European facility operated. 

In March 2015, Intermediate Capital Group, a London-based asset manager, acquired Loparex from ABN AMRO [3]. 

Lastly, in June 2019, Pamplona Capital Management, a London-based PE firm, acquired Loparex from Intermediate Capital Group [3]. While the exact financial terms of the deal were not disclosed, Pamplona funded it with a $370mm first-lien TLB due 2026 and a $140mm second-lien term loan due 2027, equating to $510mm in total acquisition debt. At the time, Loparex was generating $457mm in revenue and estimated LTM EBITDA of $60-70mm, implying entry leverage of approximately 7-8.5x [5]. Sources indicated a total purchase price of approximately $900mm, implying an LTV of ~57% and an estimated entry multiple of 13-15x. 

Pamplona’s acquisition thesis was relatively straightforward. Loparex was already a specialized market leader in the release liner space, with strong customer relationships and a global footprint. This made the company a great platform for future bolt-on acquisitions, as its scale and technical capabilities created meaningful integration and cross-selling opportunities. 

Just months following the Loparex buyout, Pamplona already announced its first bolt-on acquisition of Infiana Group in September 2019. Infiana was a German specialty film producer with manufacturing operations in Forchheim, Germany, and Malvern, Pennsylvania. The Infiana deal was substantial, as it roughly doubled Loparex’s European footprint, added complementary film-based release liner capacities, and pushed pro forma revenues to approximately $689mm, from $457mm, a $232mm or 50% increase [5]. 

Loparex funded the add-on with a €186mm ($207mm) EUR-denominated addition to its 1L TL, as well as a $45mm HoldCo PIK loan, equating to ~$253mm in acquisition-related debt. Pro forma to the acquisition, Moody’s reported leverage of 7.9x [5]. Given total debt of ~$763mm, this equates to adjusted EBITDA of approximately $97mm. Given our adjusted EBITDA estimate of $60-70mm for Loparex alone, we infer that the Infiana acquisition added around $30mm of EBITDA, equating to an ~8.5x leverage/entry multiple, as the deal was entirely debt-funded. 

Following Pamplona’s 2019 buyout, Loparex would soon encounter its first unexpected tailwind: the COVID-19 pandemic. While initially, COVID-19 briefly interrupted operations, the pandemic ultimately supported demand in several of Loparex’s key end markets, including hygiene products, e-commerce-driven shopping labels, and construction-adjacent activity, which surged as rates dropped to near zero. At the same time, in August 2020, Loparex announced the completion of the integration of Infiana Group [6]. This integration appeared perfectly timed, as Loparex added a substantial amount of capacity at the exact time demand spiked across end markets. 

Following the initial COVID-19 tailwinds, 2021 marked a period of both inflation and supply chain disruptions, which had mixed effects on Loparex. To start with the benefits, as customers across the company’s various end markets feared long-term supply chain issues, they aggressively stocked up on release liner inventory. However, Loparex also faced rising costs for raw materials (silicone, paper, etc.), energy costs (especially in Europe), freight, and labor. In response to rising costs, the company announced a widespread price increase of 10-15% in October 2021 and another round in October 2022 [7].

In 2022, these price hikes preserved revenue on a nominal basis, but masked an underlying deterioration in volume that began in late 2022. As supply chains began to normalize, customers who had built up significant safety stocks of inventory began ordering less, returning inventory to normal levels. This issue, which plagued many tier 1 and 2 suppliers at the time, caused order volumes to drop sharply across nearly all of Loparex’s end markets in late 2022 and early 2023. As we noted above, with a global manufacturing footprint and a high fixed cost base, sharp drops in volume have an outsized effect on companies like Loparex, as operating leverage begins working in reverse. This dynamic was amplified by the fact that Loparex’s fixed cost base was now materially larger following the Infiana acquisition, which doubled capacity in Europe. The same investment in capacity that allowed Loparex to capture upside in 2020-2021 was now magnifying the downside.  

Compounding the effect of customer destocking was a cyclical downturn in one of Loparex’s main end markets. Construction activity, which directly and indirectly accounted for over 40% of Loparex’s revenue through tapes, insulation backings, HVAC products, etc., was hit hard as the Federal Reserve’s interest rate hikes chilled residential housing starts, which dropped 9% in 2023, also marking the first year of consecutive decline since 2009 [8]. 

The financial impact of the factors above was devastating. In the first half of 2023 alone, the company’s adj. EBITDA decreased by 42% [9]. By September 2023, Moody’s reported leverage of 17.5x, implying roughly $44mm of adj. EBITDA. At the same time, elevated interest rates were eating virtually all of the cash that the company was generating. As detailed in the build below, SOFR of 5.00%+ raised the company’s effective interest rate to over 10.5%, propelling cash interest expense to an estimated $78mm. Assuming modest capex and working capital requirements of ~$10mm total, we estimate that Loparex was burning ~$45mm annually as of late 2023. At this time, the company had drawn $28mm of its RCF, leaving $22mm remaining [11]. While a cash balance as of mid-2023 is not disclosed, we can infer the company likely kept around $25mm of cash on hand, resulting in total liquidity of approximately $50mm. At a $45mm annualized burn rate, the company would run out of liquidity by mid-2024. 

To combat this cash burn, Loparex underwent aggressive cost-cutting measures, starting with the elimination of 184 jobs at its Forchheim, Germany, facility [10]. This represented roughly a quarter of the 700-person workforce at the site. However, these job cuts and other cost-cutting measures weren’t enough to stop the leakage, and Loparex was forced to negotiate an emergency balance sheet solution. 

In October 2023, the company and Pamplona negotiated an emergency liquidity bridge. First, the company’s revolver maturity was extended 18 months, from August 2024 to February 2026, with the commitment reduced to $38mm [12]. Next, Pamplona injected $35mm of fresh equity into the business, which we can infer was used to pay down the revolver, in exchange for the maturity extension [12]. While this injection was enough to avoid a near-term default, it did little to solve Loparex’s ongoing cash burn issues.

Shortly after, in February 2024, Loparex suspended manufacturing operations at its Eden, North Carolina, facility, eliminating an additional 91 jobs [13]. The Eden plant had been part of Loparex since 2001, when it was acquired as part of the Rexam Release deal, and its closure represented the company’s continued efforts to rationalize its cost structure. 

By January 2024, lenders began preparing for a potential restructuring. A group of first lien lenders retained Lazard and Akin Gump, while another group of second lien lenders retained King & Spalding [14]. At the same time, Loparex’s 1L debt traded in the low 70s, down from the low 80s in October. With 1L debt in the low 70s, the market was pricing in a real probability that 1L lenders would be impaired, a notable signal of distress and an upcoming restructuring. 

Over the next two months, Loparex, which had retained PJT Partners and Goodwin Procter, worked with lenders on a comprehensive capital structure solution, addressing both the 2026 1L maturity wall as well as its continued liquidity issues. For context, sources indicated that Loparex ended 2023 with $40mm of its $50mm RCF drawn, implying continued negotiations to lift the $38mm cap previously imposed, as well as ~$25mm of cash, leaving the company with roughly $35mm in liquidity. By March 2024, given the cash burn rate we estimated above, Loparex’s liquidity likely sat below $20mm. 

On March 1, 2024, Loparex launched a non-pro-rata uptier exchange with the support of an ad hoc group (AHG) of first-lien lenders. As a reminder, our Institutional Tier subscribers can access our LME tracker here.