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Swedish non-public fairness group EQT has supplied to inject €220mn to assist safe a restructuring deal at considered one of its two struggling French portfolio firms.
EQT, which purchased the nursing house group Colisée in a 2020 buyout, made the proposal on Monday as a part of a bundle that will see holders of a €1.2bn secured mortgage write off round 36 per cent of their debt in change for a 33 per cent stake within the enterprise, in accordance with folks conversant in the discussions.
Whereas no deal has been agreed, EQT’s provide to inject cash has been positively acquired by lenders, one of many folks stated. A smaller credit score line from banks wouldn’t be impaired, one other individual stated.
Closely indebted French firms have come beneath strain in recent times, as a consequence of a moribund financial system coupled with the elimination of post-Covid assist for companies and rising rates of interest on their borrowings.
If EQT succeeds in recapitalising Colisée, it could mark the most recent in a string of debt restructurings in France, with Patrick Drahi’s Altice telecoms group placing a landmark €24bn cope with collectors of its French enterprise earlier this yr.
It will additionally assist repair the stability sheet at considered one of two EQT portfolio firms in France to have come beneath strain in debt markets in current months.
Colisée’s debt slumped in worth this yr after it disclosed accounting discrepancies and rising liquidity pressures. The debt of medical laboratory group Cerba, which EQT purchased in 2021, can be buying and selling at distressed ranges following worsening efficiency.
Cerba’s secured bonds are buying and selling at 77 cents on the euro, whereas its unsecured debt is buying and selling at a couple of fifth of face worth, suggesting lenders are braced for heavy losses. Cerba reported slowing earnings earlier this month that meant its leverage on a debt to adjusted ebitda foundation had risen to eight.6 instances.
Colisée operates 400 websites throughout France, Belgium and southern Europe, making it the fourth largest operator in Europe. Moody’s downgraded its credit standing to Caa2 final month, which the ranking company defines as indicating “excessive credit score danger”, noting there had been a “important deviation from our expectations for earnings restoration and continued enough liquidity”.
Moody’s added {that a} “couple of accounting discrepancies” had additionally “resulted in decrease earnings”.
Colisée’s rival Orpea reached a debt restructuring settlement two years in the past, after struggling beneath a excessive burden and going through scrutiny from a journalist’s investigation alleging systematic mistreatment at its care properties.
French grocer On line casino can be coming beneath renewed pressure in debt markets, lower than a yr after it accomplished a restructuring by which greater than €5bn of debt was worn out and exchanged for fairness.
EQT and Colisée declined to remark.
