HIG Europe, the European arm of buyout group HIG Capital, acquired £70 million-worth of UK marketing company Bezier’s senior debt, before converting it into equity and thereby giving it control of the company.
HIG’s debt investment affiliate Bayside Capital co-invested in the deal, and will provide the company with a loan facility going forward, according to HIG managing director Paul Canning.
The company had been struggling under a significant debt burden, believed to total about £120 million. Former owner MidOcean Partners was forced to relinquish majority control of the business to its lenders, RBS and Lloyds TSB, according to a source close to the company.
MidOcean acquired the business in 2005 from private equity peer Electra Partners for £77 million, and later injected a further £7 million as part of a restructuring in 2009 according to press reports. RBS and Lloyds reportedly renegotiated covenants on the company’s debt and extended its terms as part of the restructuring. MidOcean could not be reached for comment.
There are likely to be more opportunities like this as UK banks look to offload assets
Paul Canning, HIG Europe
HIG is understood to have paid less than the £70 million face value of the debt, and will inject further equity into the business as part of the deal. HIG declined to comment on the terms of the deal.
David Mitchell, who was brought in by MidOcean as chairman of the company during the company’s 2009 restructuring, will reportedly step down after completion of HIG’s deal. Chief executive Trevor O’Reilly will remain at the company and retains a stake in the business.
Bezier is the UK’s largest provider of integrated point-of-sale marketing services, according to a statement from HIG, with clients including Boots, Coca-Cola, Disney and Unilever.
HIG’s Canning told Private Equity International: “It’s a sector we know well, having previously invested in marketing businesses like Engine Group. It’s a great business but it was over-levered historically. It had accumulated a lot of debt over the years, having been acquired as part of a buy-and-build strategy. We’ve been able to take it off the banks’ hands and sort out the company’s balance sheet so it has a more appropriate capital structure going forward.”
“There are a number of smaller players in this space, so we will look to make acquisitions in due course as part of a consolidation play,” Canning said.
“There are likely to be more opportunities like this in the coming months as UK banks in particular look to offload assets,” Canning predicted.