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Apax Considers Injecting $78M into Marken

Apax Partners is considering injecting 50 million pounds ($78 million) into British medical courier Marken to avoid losing control of the company after it breached loan covenants, Reuters wrote Thursday. This week Marken told lenders, including Lloyds Banking Group, that it had breached its leverage covenant at the end of December, Reuters wrote. Marken’s earnings have slumped since Apax bought the business for 975 million pounds from Intermediate Capital Group in December 2009.

(Reuters) – Private equity firm Apax Partners is considering injecting 50 million pounds ($78 million) into British medical courier Marken to avoid losing control of the company after it breached loan covenants, investors said on Thursday.

This week Marken told lenders, including Lloyds Banking Group, that it had breached its leverage covenant at the end of December, the investors said.

Marken’s earnings have slumped since Apax bought the business for 975 million pounds from Intermediate Capital Group in December 2009 amid competition from other logistics groups and lower levels of research and development by large pharmaceutical groups.

Apax Partners declined to comment.

Rothschild is advising Lloyds and two other investors. The group is discussing whether Apax’s offer is enough to get lenders to waive the breach and relax covenants, the sources said.

One investor said that the lenders were calling for 100 million pounds.

Discussions are also focusing on whether the new money would be injected as equity or debt, or whether it would be used to pay down debt, the investors said.

Marken’s buyout in late 2009 was one of the first completed after the collapse of Lehman Brothers.

Apax was seen as having overpaid for the business after making a last-minute all-equity bid for Marken, trumping a bid by Hellman & Friedman.

The high purchase price was backed by a 365 million pounds debt package, according to Thomson Reuters LPC data. The deal, which was solely underwritten by Lloyds, was the largest private equity debt deal of 2009 and the largest sole underwriting by a bank.

Apax is in the middle of raising a new 9 billion euro ($12 billion) buyouts fund and has been buying actively in the last twelve months, snapping up businesses including telecoms group Orange Switzerland and German fashion retailer Takko.

Apax was also forced to inject 60 million euros of equity into Takko to get lenders to agree to reset loan covenants after a drop in the company’s earnings. ($1 = 0.6372 British pounds) (Reporting by Isabell Witt; Editing by Helen Massy-Beresford)