The unravelling of the debt-fuelled private-equity bubble is set to continue with Britain’s biggest packaging company poised for a bank takeover.

Linpac, which makes fast-food cartons for McDonald’s and packaging for Asda and Sainsbury’s, will soon be controlled by a consortium of banks including Lloyds, after six years of ownership by Montagu Private Equity.

Montagu acquired Linpac in an £860m deal that thrust the Cornish family who founded it into the rich elite when they pocketed about £700m of the proceeds.

However, the weight of more than £600m debt used to finance the buyout and a subsequent refinancing became hard to bear in the recession as the company, which employs more than 9,000 globally, also struggled with rising costs.

The restructuring deal is a blow to Montagu, which will lose most of its remaining investment. It is understood that it recouped about 80% of its original investment in 2007 through a recapitalisation.

The new deal will put the company on a firmer footing. The banks will wipe out about £300m of debt and inject £60m cash into the business.

Since the onset of the credit crunch, a series of private-equity-owned companies has fallen into the hands of banks after trouble with debts, including Incisive Media, Robert Dyas and Samsonite.

A spokesman for Montagu said: “Linpac has been badly hit by the recession, customer orders are dramatically down and the business has seen a significant increase in energy costs and extreme volatility in raw material prices.”

One firm that has managed to get approval for fresh banking covenants is Doncasters, the engineering concern bought by Dubai International Capital for £700m in 2006.

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