LONDON Feb 11 Lenders to Britain's General
Healthcare Group (GHG) are in talks on a restructuring of its
around 2 billion pound ($3.1 billion) debt pile, banking sources
said on Monday, in a process which threatens to leave them
nursing heavy losses.
The company, one of Britain's largest independent healthcare
services providers, was bought in 2006 by a consortium
comprising Apax Partners, Brockton Capital, London & Regional
Properties and Netcare (which bankers say subsequently also
bought Brockton's share of the business).
That group was backed by 2 billion pounds of borrowing,
split between 315 million at its operating business (opco) -
known as BMI Healthcare - and 1.65 billion at its property arm
(propco), according to Thomson Reuters LPC data.
The debt matures later this year, bankers said.
GHG has suffered in the economic downturn, which has led to
a drop in demand for private healthcare as consumers reign in
spending, bankers said, undermining its debt-based model.
In the same sector, Southern Cross collapsed in
2011 after defaulting on its debt.
Lazard and PwC are advising lenders and are
working with a steering committee of lenders led by Barclays
, Mizuho and Pfandbriefbank to find ways to
deal with GHG's debt burden, the banking sources said.
Options include an extension of GHG's debt; an equity
injection by shareholders; or a debt-for-equity swap whereby
lenders agree to wipe out debt in return for a portion of the
business, bankers said.
GHG declined to comment.
The opco debt has been reduced to around 234 million pounds
but the propco is struggling with its huge debt pile, bankers
An opco/propco structure, as it is commonly referred to,
involves the propco's debt being serviced with rent payments
from the opco.
The propco loans are almost worthless, quoted in Europe's
secondary loan market at 8 percent of face value, according to
TRLPC data. However, one trader quoted them as low at 1 percent
of face value. This means lenders could suffer heavy losses in a
restructuring, bankers said
The company's opco loans are quoted in distressed territory
at 77.5 percent of face value, according to TRLPC data.