Oaktree Capital Management is understood to have walked away from a possible deal to rescue Collection House, say sources, leaving Balbec Capital as the party that is believed to be in talks to assist with a turnaround of the struggling debt collection business.
It comes as the company’s future appears to be hanging in the balance, with suggestions that its Australian lenders are losing patience with the struggling debt collector, as reported by DataRoom last week.
Balbec Capital had earlier entered into a put and call option with Collection House, which in November last year said would see it secure $10m of cashflows, as it was paid fees for managing a portfolio on behalf of Balbec.
The thinking is now that it is in Balbec’s interest to ensure that Collection House remains afloat and it is believed to be looking at a loan-to-own strategy for the company. 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.
It has invested more than $US5.2bn ($7.2bn) in 19 countries.
Los Angeles-based Oaktree, meanwhile, has retreated from Collection House as last week it emerged as a buyer of distressed debt in the coal-fired Bluewaters Power Station from ANZ for 71c in the dollar.
The debt had a $36m face value.
Oaktree also made approaches to buy Seven West Media earlier this year but was rebuffed by the free-to-air broadcaster.
Last month 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.
Commonwealth Bank and Westpac are among the lenders to the Brisbane-based group.
Flagstaff Partners has been working for the business.
The debt collection industry appears to have fallen out of favour with lenders as it is now at the mercy of far tougher regulation.
Meanwhile, DataRoom can reveal that former McGrath Nicol partner Joe Hayes, who now runs Wexted Advisors, has been appointed to MMA Offshore to assist with a safe harbour agreement with the company.
The listed MMA Offshore, which supplies and maintains oil rigs and their offshore infrastructure, also has been working with adviser Deloitte, while lenders have been aided by law firm Allens. It comes as debt is expected to trade in the company, with its lenders ANZ, CBA and National Australia Bank among its consortium of seven banks.
As at December, MMA’s loans amounted to $275m and the debt was due to expire in September next year.
Its market value is $53.7m and last month it told the market that it had received waivers to conditions from its lenders.
Three years ago, the company was on the radar of hedge funds after failing to meet its debt obligations.
The rising oil price offered a much needed lift to the operation, but the oil price has since collapsed on the back of the COVID-19 pandemic.
The largest investor is hedge fund Black Crane Capital, which is understood to own about 19 per cent of the company.
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