20:20 Mobile looks set to face a debt restructure as it becomes increasingly likely that it will miss the targets set to its debt syndicate at the end of last year.
A report published last Friday (18 January) was circulated to the banking fraternity and included investors of 20:20’s debt syndicate, led by Japanese bank Mizuho and the Royal Bank of Scotland (RBS), which are known to have serious concerns about their investment.
A meeting is scheduled for early next month to review the disappointing performance in 2007 and draw up plans for 2008. New CEO Meinie Oldersma (pictured) will be introduced at the meeting and 20:20’s private equity owner, Doughty Hanson, is tipped to reveal that it will make more money available for acquisitions or clear some of the debt.
Doughty Hanson explored the idea of buying Hugh Symons Communications from Carphone Warehouse before Christmas, but pulled back from a possible deal.
20:20’s debt has fallen into the ‘distressed debt’ category, with the value of the debt diminishing sharply. However, sources close to Doughty Hanson deny that it has breached its loan covenants, which could be the trigger to prompt Mizuho and RBS to wrest control of 20:20 Mobile from Doughty Hanson.
Mobile reported at the end of last year that 20:20’s Dextra business saw profits tumble in the wake of high-profile cashback-fuelled collapses of some of its biggest dealers – notably Dialamobile and Mobile Media Systems. The broader 20:20 Mobile group is also some way adrift from its targets.
Dextra posted a profit of £150,000 for October last year, well below the £900,000 per month it achieved between October 2006 and June 2007. The 20:20 Group also saw profits fall £5.7 million short of target in October 2007, at £3.1m.
Doughty Hanson bought 20:20 for £347m in August 2006 from John Caudwell, who also sold Phones 4u for just under £1bn.