Private equity firm Advent International is to use a controversial debt recapitalisation for sports marketing group Sportfive before its sale this year.

Morgan Stanley, a co-adviser on the auction alongside Goldman Sachs for the German group, was structuring the recapitalisation until investors rejected the plan because of its high gearing. The buyout group dropped Morgan Stanley in favour of an alternative suggestion from Dresdner Kleinwort, which is using the former's original idea to allow the debt to be transferred in the event of an acquisition by private equity firms. Morgan Stanley used a transferable recapitalisation when it sold Swedish plumbing company Ahlsell last year. The deal was controversial because bankers prefer to call in debt after a change of ownership and earn fees to replace it. The use of a transferable recapitalisation could favour private equity firms in the Sportfive sale but trade rivals are also thought to be interested. Sportfive could raise up to €1bn ($1.3bn), compared with the €560m Advent paid for its stake in 2004. Other shareholders include Luxembourg media group RTL, which owns 25%, and the company's management, which holds 10%. The debt package arranged by Dresdner is thought to be worth less than €750m. It is expected to allow Sportfive to pay Advent a dividend to cover its equity cost of €115m from its acquisition.