Reuters: Private Equity: RLPC-Biffa lenders seek salvation strategy

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RLPC-Biffa lenders seek salvation strategy May 29th 2012, 14:43 By Isabell Witt and Claire Ruckin LONDON | Tue May 29, 2012 10:43am EDT LONDON May 29 (Reuters) - Lenders to UK waste manager Biffa are bracing themselves for a debt-for-equity restructuring if it is unable to sell certain divisions to reduce its 1-billion pound ($1.57 billion) debt. Biffa is expected to breach loan covenants this year due to reduced waste volume on the back of lower consumption. . Its earnings will also be hit by a new UK landfill tax. Senior lenders to Biffa, which is owned by Montagu Private Equity and Global Infrastructure Partners (GIP), have now formed a steering committee comprising Dexia, GE Capital, GSO Capital Partners, M&G and HSBC, banking sources said on Tuesday. This group is in the process of appointing restructuring advisers, the sources added. Lenders of Biffa's mezzanine loans are considering swapping their claims for equity in the business because their holdings have become almost worthless, the sources said. The mezzanine loans were bid at 5 percent of face value in secondary markets on Tuesday, from 24.3 percent last week, according to Thomson Reuters LPC data. Senior lenders may also start working on a plan for a potential debt-for-equity swap, but "it depends if they want to own the business", a senior lender said. A debt-for-equity swap would dilute or wipe out Montague's and GIP's investment, both of whom declined to comment. Biffa's owners have been working with Goldman Sachs since the start of the year to try and sell the business or parts of it. Any proceeds would be used to repay some debt, sources said previously. Montague and GIP bought Biffa in 2008, backed by 860 million pounds of senior debt and 280 million pounds of mezzanine loans arranged by Bank of Scotland, Barclays, Credit Suisse, HSBC and RBS. Link this Share this Digg this Email Reprints

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