US-based distressed investors Balbec Capital and Oaktree Capital Management have emerged as suitors of the struggling debt collector Collection House.
It is understood that both groups are sizing up a loan-to-own strategy for the Australian-listed company, in a similar move to Carlyle with rival Pioneer Credit.
Based in New York and founded a decade ago, Balbec Capital describes itself as a global private investment firm with expertise in sourcing alternative credit investments, with a focus on assets in bankruptcy proceedings, restructuring, or some other form of distress.
Balbec has invested over $US5.2bn in 19 countries.
Los Angeles-based Oaktree, meanwhile, is no stranger to the Australian market, sizing up numerous opportunities, including most recently Seven West Media, which recently rebuffed one of its approaches.
The future of Collection House is believed to be hanging in the balance, with suggestions that its Australian lenders are losing patience with the struggling debt collector.
It is believed that efforts to obtain new debt have faced challenges and its future now appears uncertain.
In June, Collection House updated the market, saying its net debt was $209.4m and it had posted a $47.3m loss for the first half of 2020.
Its market value was last said to be about $153m.
CBA and Westpac are among the lenders to the Brisbane-based group.
The debt collection industry appears to have fallen out of favour with lenders as it is now at the mercy of far tougher regulation.
Flagstaff Partners has been working for the business.
Only last year Carlyle Group gained control of Collection House’s listed rival, Pioneer Credit.
Carlyle acquired its debt for $130m, outbidding listed rival Credit Corp.
It is understood that Pioneer is in negotiations with Japanese lender Nomura to source debt.
Pioneer Credit announced last month it was in negotiations with parties to refinance its debt, namely $40m of secured subordinated medium-term notes.
It earlier entered into a takeover deal via a scheme of arrangement with Carlyle, but that deal was thrown into turmoil due to COVID-19 when the private equity firm backed out of its takeover plan, citing a material adverse change in conditions as its reason for withdrawing from the deal.
Pioneer has also since entered into a standstill agreement with Carlyle over its debt obligations.
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