Debt Collector Lowell Plans to Raise $2.9 Billion to Repay Bonds
2020-10-21 12:25:14.57 GMT
By Antonio Vanuzzo and Ruth McGavin
(Bloomberg) — Debt collector Lowell Group Ltd. plans to
use 1.61 billion pounds ($2.1 billion) of new notes along with
600 million pounds of equity to repay some bonds, according to a
statement on Wednesday, in a larger-than-expected refinancing
deal.
The Permira-owned company said it will fully redeem five
bonds maturing in 2022 and 2023. It will also partially repay
draw-downs on its revolving credit facility and extend the
maturity from 2021. Remaining proceeds will be used for general
corporate purposes, which may include further debt repayments or
future portfolio purchases, according to the statement.
“The market was expecting a refinancing of the maturities
but not such a significant equity contribution from the
sponsor,” said Benjamin Sabahi, head of credit research at
Spread Research in Lyon, France. “This is a game changer not
only for Lowell but also for the whole industry.”
Bonds issued by debt collection companies fell earlier this
year as the pandemic and its impact on the real economy raised
investors’ concerns over their ability to continue generating
cash. Lowell’s secured notes due 2023 dropped to as low as 75
pence on the pound in May.
The new debt will include 400 million pounds of bonds due
2025, at least 500 million euros ($593 million) of notes
maturing in 2025 and at least 500 million euros of securities
due in 2026, according to a person familiar with the matter, who
isn’t authorized to talk about it and asked not to be
identified.
Representatives for Lowell and Permira declined to comment
on the bond sale. Permira acquired Lowell in 2015.
Lowell’s 230 million pounds of notes due in November 2023
jumped 16 pence on the pound to 101 pence, the biggest increase
since they were issued in 2015, according to data compiled by
Bloomberg. Its 565 million pounds of notes maturing in November
2022 rose 3 pence to 99 pence.
Credit-default swaps insuring the company’s bonds–an
indicator of investors’ perception of its risk of default–
plunged by a record 382 basis points to an all-time low of 178,
according to data provider CMA.