Reuters – Distressed Investors Pile into Biffa Loans

Distressed investors are buying into loans of UK waste management firm Biffa as they attempt to take control of the company, which is restructuring its 1.1 billion pounds ($1.7 billion) of debt, writes Reuters. Biffa is owned by Montagu Private Equity and Global Infrastructure Partners.

Reuters – Distressed investors are buying into loans of UK waste management firm Biffa as they attempt to take control of the company, which is restructuring its 1.1 billion pounds ($1.7 billion) of debt, banking sources said.

One bank sold a 13 million pound piece of Biffa senior loans at 59 percent of face value on Tuesday, traders said. Trading desks received further calls on Wednesday to trade more Biffa loans as distressed investors seek to build a stake in the business’ debt, the traders added.

Biffa declined to comment.

Distressed investors, often known as loan-to-own investors, buy stakes in the debt of distressed companies with the aim of taking ownership of a company through a debt-for-equity-swap, such as in the recent case of British gym chain Fitness First.

Biffa, owned by Montagu Private Equity and Global Infrastructure Partners, recently started restructuring talks with lenders after coming under pressure in a difficult trading environment due to reduced volumes of waste and cuts in spending by local authorities.

Lenders agreed to waive covenant tests on Biffa’s loans until October, ahead of an interest payment that is due on the company’s 280 million pounds of mezzanine loans, banking sources said, adding that the mezzanine lenders may put in a proposal to convert their debt into equity. Their loans are worth one pence on the the pound, according to Thomson Reuters LPC data. ($1 = 0.6371 British pounds) (Editing by Jane Baird)