Intrum AB bondholders who considered joining together to negotiate debt with the Swedish company have divided into different groups due to the varied interests of investors depending on the maturities of the bonds they hold, according to sources consulted by Bloomberg. A group of bondholders with notes maturing in 2024 and 2025 have selected Weil, Gotshal & Manges LLP as legal counsel and must soon appoint a financial firm.
However, which borrowed heavily in the era of low interest rates to buy consumer loan portfolios, it is now grappling with higher borrowing costs and a slowdown in business.
The debt collection company this month hired Houlihan Lokey and law firm Milbank to help restructure its €5.4 billion debt, with maturities ranging from July this year to March 2028.
While Intrum has cash from the sale of a third of its bad debt portfolio to Cerberus Capital Management, the question remains whether the company will pay off what it owes this year or if that will also be included in a potential restructuring.
The goal of bondholders in the group advised by Weil is to propose a solution for the bonds due in 2024 and 2025 that involves creditors providing new funds to help the company deal with the broader capital structure, the people said. . familiar with the situation.
Conference with analysts
The company will host a conference on Monday to collectively discuss with analysts the questions it has been receiving about the strategy and the rationale behind the decision to hire advisors to restructure its capital structure. Intrum’s bonds and shares have plummeted over the past year.
The Swedish debt collector Intrum has enough liquidity to cover around 93% of its debt maturing in 2024 and 2025, as explained by its CEO, Andrés Rubio, at the conference this Monday. He also said that they are still analyzing how to deal with the restructuring because at this moment they cannot access the market on attractive conditions, according to Reuters.
While Intrum has enough liquidity for about 93% of its 2024 and 2025 maturities, it will not allow debt payments to deplete its cash during that period, CEO Andrés Rubio said. “I would be reducing my liquidity to zero, no company wants to reduce its liquidity to zero,” Rubio said.
S&P, Moody’s and Fitch just lowered all of Intrum’s credit ratings to B or B3, in “highly speculative” junk bond territory, and indicated that further reductions could be coming. The 2025 bonds are trading at a discounted 69 cents per euro. Short sales represent 24% of Intrum’s free float, according to data from S&P Global Market Intelligence as of March 21.
Private equity firm Nordic Capital and pension fund AMF, which own almost 40% of the share capital, are backing the company, according to Intrum’s CEO. According to several investors, the company’s problems date back to its 2017 merger with Norway’s Lindorff, another century-old debt collector of a similar style that was owned by Nordic Capital. Before that, Intrum Justitia (its pre-merger name) was listed in Stockholm and was considered an unshowy, well-run company with a solid balance sheet.
