Activity appears to be ramping up among opportunistic private equity buyers in Australia, with new names surfacing for a potential recapitalisation of Collection House and Bluewaters Power Station.
DataRoom can reveal that Cerberus Capital Management has been looking at the struggling listed debt collection business Collection House, while the credit arm of Bain Capital may also be in the mix.
It is understood the competition to gain control of the business extends to about three or four parties.
Earlier, Oaktree Capital Management was interested, and while some say that it is no longer vying for the business, others believe it is still in the mix.
Balbec Capital has also looked at the business.
The US-based outfit earlier entered into a put and call option with Collection House and has an interest in ensuring it remains afloat.
Collection House has a standstill agreement in place with its senior lenders after struggling even before the onset of the COVID-19 pandemic.
The debt collection industry appears to have fallen out of favour with lenders as it is now at the mercy of far tougher regulation.
Collection House recently updated the market, saying its net debt was $209.4m and it had posted a $47.3m loss for the first half of 2020.
The face value of the company’s payment arrangement book in its purchased debt business is now $297m.
The market value of Collection House was last said to be about $153m.
Commonwealth Bank and Westpac are among the lenders to the Brisbane-based group and are advised by McGrath Nicol. Flagstaff Partners has been advising the business.
Collection House is not the only target for opportunistic buyout funds as operators continue to zero-in on the Bluewaters Power Station in Western Australia.
It is understood that the only existing lender remaining with Bluewaters is US-based fund Starwood Capital, prompting some to wonder what plans it may have for the coal-fired power station that has struggled to refinance its loans due to concerns by banks about exposure to environmentally unfriendly assets.
Buyers of debt from traditional lenders such as Westpac and NAB have included Elliott, Davidson Kempner and Oaktree Capital Partners, while traders such as SC Lowy, Bank of America and Deutsche Bank have also acquired the debt.
The loans are understood to have been purchased for between 70c and 75c in the dollar, higher than the 66c offered by the asset’s owner Sumitomo.
The face value of the debt pile was about $369m.
Most believe the game plan for the lenders will be to bring together the power station and the Griffin Coal mine. It provides the fuel for the power station, which supplies about 16 per cent of Western Australia’s electricity.
Other buyout funds that enjoy buying up assets in the turnaround space and are said to have been actively looking for opportunities in the Australian market include Brookfield, Blackstone, Kohlberg Kravis Roberts and, locally, funds such as Anchorage Capital Partners and BGH Capital.
BGH Capital has been focused on buying cinema and theme park owner Village Roadshow, which has faced operating challenges for its cinemas and theme parks relating to COVID-19 disruptions.
Brookfield is looking at opportunities while also offloading assets — selling its New Zealand-based Healthscope pathology operations to a NZ Super-led consortium that included Canada’s Ontario Teachers for more than $NZ550m.
The group fended off competition from Singapore’s Keppel Infrastructure.
Meanwhile, DataRoom can reveal that Anchorage had been in negotiations to work with LJ Hooker’s Singaporean lender Koi Structured Credit to acquire the business before chairman Janusz Hooker and his US backer Michael Fuchs purchased its debt.
The real estate chain was in the hands of voluntary administrator KPMG and the fund was understood to have bid about $40m to buy LJ Hooker.
Mr Hooker and his backers were understood to have initially offered about $5m for the business while the Singaporeans, owed $65m, bid about $40m.
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