RLPC-Advisers appointed on PHS

LONDON Thu Feb 27, 2014 12:29pm EST

LONDON Feb 27 (Reuters) - UK hygiene services company PHS Group has appointed Rothschild and its lenders Houlihan Lokey to advise on a possible debt restructuring for the debt laden company, banking sources said on Thursday.

Charterhouse acquired PHS in 1999, floated it in 2001 and bought it back again in 2005. In 2007 the buyout firm recapitalised the business with 995 million pounds ($1.66 billion) of debt. Last March Charterhouse injected 13 million pounds of equity into the business to avoid breaching loan covenants, according to Thomson Reuters LPC.

PHS's loans have fallen substantially on Europe's secondary loan market after weak company trading performance led lenders to reduce their exposures, which attracted a number of hedge funds specialising in distressed debt.

The company held a scheduled meeting with lenders on Thursday to ask for a covenant waiver to avoid a potential breach of its most recent financial tests. Charterhouse officials did not attend the meeting, the sources said.

"The value of PHS is now in its senior debt. The junior debt could be wiped out and there is no value in the equity," one of the sources said.

PHS declined to comment and Charterhouse was not immediately available to comment.

PHS's senior loans were quoted as low as 68 percent of face value on Thursday morning from 80.7 on Feb. 3, the sources said. Its second lien was quoted at 16.5 on Wednesday, TRLPC data shows.

PHS was founded in 1963 as one of the first providers of sanitary disposal in Britain and now offers more than 200 products and services to over 250,000 customers. It employs around 5,000 staff at over 140 sites throughout the UK, according to the company's website.

($1=0.5998 British pounds) (Reporting by Claire Ruckin; Editing by Catherine Evans)

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