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Private equity firm EQT is set to hand creditors the keys to its French nursing home group Colisée, as lenders including Blackstone and KKR prepare to take control of the heavily indebted business.
The restructuring of Colisée’s €1.8bn in debt will involve creditors injecting more than €250mn into the company, according to people familiar with discussions, wiping out a third of the debt and taking 100 per cent of the company’s equity. Colisée’s €1.2bn secured loan is trading at just 55 cents on the euro, a sign it is viewed as a high credit risk.
It is the latest in a string of restructurings in France in recent months, as economic shocks push struggling French companies into negotiations with the holders of their debt, often US hedge funds.
Other companies currently in talks with creditors include retailer Casino, which is on course for its second debt restructuring in less than two years with a proposed €300mn injection from majority shareholder Daniel Křetínský.
EQT had its own offer to recapitalise Colisée with €250mn of equity rejected by creditors earlier this year. One adviser to Colisée’s creditors said that lender-led restructurings were becoming “more and more frequent in France” and “not just for small companies”.
Higher interest rates combined with weaker than expected financial performance and the removal of post-Covid support for businesses have led to many indebted companies running into difficulty in recent months.
In France, the pressure is particularly acute as there has been a higher number of leveraged buyouts in recent years than elsewhere in Europe, and several businesses are vulnerable to downturns in consumer spending, in sectors such as retail and telecoms.
Other high-profile restructurings in recent years include care home provider Orpea and telecoms company Altice.
Colisée is one of two troubled French investments for EQT.
Cerba, a laboratory company bought by EQT in 2021, had struggled to maintain the high levels of profitability it enjoyed during the Covid-19 boom in medical testing, people following the situation said.
Cerba’s secured bonds are trading at 73 cents on the euro, while its unsecured debt is trading at about 13 cents on the euro, as lenders expecting heavy losses have sold out.
A French government-led audit of the laboratory sector warned in August that more restructurings in the sector were “inevitable given the risks taken by investors and lenders in recent acquisitions based on the assumption that laboratories would continue to generate abnormally high profitability”.
Colisée, EQT and Blackstone declined to comment. KKR did not immediately respond to a request for comment.
