Lenders including fund managers KKR and M&G are on the verge of taking control of the PHS Group, one of the UK’s biggest office-cleaning and services companies, in a debt for equity swap.
Both firms along with a number of US hedge funds are close to agreeing a restructuring which would reduce PHS’s senior debt by around 60 percent from £945 million (€1.2 billion; $1.5 billion) to £374 million, a source familiar with the situation said.
Private equity firm Charterhouse, the previous owner of the Wales-based cleaning company, will hand over all its shares to lenders, which also include Monarch, Anchorage, Davidson Kempner and Halcyon.
A quasi-equity payment-in-kind loan of around £305 million will also be provided to PHS and held at holdco level, whereby it will be triggered by a sale of the business, the source said.
It is understood the proposed restructuring has the approval of more than 66 percent of stakeholders.
PSG Group declined to comment. KKR and M&G had not responded to a request for comment at time of going to press.
Charterhouse bought PHS in 1999, floated it in 2001 and bought it back in 2005 for £740 million, including debt. It recapitalised PHS in 2007 with £995 million of debt. The company provides bathroom products and other office facilities to thousands of businesses.
In the summer, it was reported that PHS was running a sales process as well as exploring a debt restructuring, as it was close to defaulting on its debt through a covenant breach.
Caerphily-headquartered PHS was founded in 1963 and employs more than 5,000 staff at over 140 sites throughout the UK.