LONDON Feb 27 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
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)