Anchorage airs Specialised Linen Services after industry rival’s sale

Commercial laundry services have been facing tough times. Picture: iStock

Fresh from Linen Services Australia striking a deal to sell to Macquarie Asset Management, its industry rival, controlled by Anchorage Capital Partners, is now said to be for sale.

DataRoom understands that Anchorage’s laundry business, Specialised Linen Services, has hit the market after recently having some hard conversations with its lenders, which include Deutsche Bank, Bain Capital Credit, Westpac, Challenger and Metrics Credit Partners.

The sector has been facing tough times, with higher power and logistics costs weighing on already tight margins at a time when some of the industries that use commercial laundries services, such as private hospitals, are struggling to stay afloat and are driving down prices.

This, after the industry was a major casualty of the pandemic, when it lost business from customers forced to close.

Anchorage’s South Pacific Laundry and Linen Services is the second-largest player in Australia and services the hospitality industry more than the healthcare sector, as is the case with Linen Services Australia.

Anchorage tried to buy its rival, but a deal was blocked by the Australian Competition & Consumer Commission.

Downer inherited Linen Services Australia from its purchase of Spotless and sold down 70.1 per cent of the business to private ­equity firm Adamantem Capital in 2021 for $155m.

It’s one of the largest Australian and New Zealand laundry providers, with about 3500 customers and 1800 staff.

Downer originally entered talks to offload the remainder to Adamantem, but instead opted to retain its stake until the latest deal that has just been announced.

The listed Downer told the market on Thursday it had finalised the sale of its 29.9 per cent interest in its Australian laundries that operate under the brands Linen Services Australia, Ensign and Taylors Laundries in New Zealand, to an Asia-Pacific private equity fund managed by Macquarie Asset Management.

Pre-tax proceeds of about $64m implies an overall price of at least $200m for the business, which industry insiders have described as a top result and a surprise that Macquarie saw value in the opportunity.

The Anchorage-owned South Pacific Laundry Group generated $19m in earnings before interest, tax, depreciation and amortisation for the year to June 2023, according to accounts lodged with ASIC.

But it posted a $30m loss after booking a loss of $34m in the previous corresponding year amid the pandemic.

It had $331m of borrowings, including $210m of bank loans.

Anchorage Capital Partners specialises in turning around distressed companies. It purchased department store chain David Jones in 2022 from Woolworths Holdings in South Africa.

Last year, it had its financial services business GBST on the market through Jefferies.