20:20 Mobile’s debt syndicate have agreed to write-off £175m of debt hanging over the distributor by taking on a near 50% equity stake in the company.
The Royal Bank of Scotland and Mizuho, two of the principle lenders to 20:20’s debt syndicate, will now take ownership of nearly half of the distributor reducing 20:20’s total debt from £265m to £90m.
It follows reports in Mobile on 16 May that a debt for equity restructure was being negotiated between 20:20’s private equity owner Doughty Hanson and the banks which helped fund its £347m takeover of 20:20 in September 2006.
As part of the deal Doughty Hanson will also inject £15m into the business, as reported in Mobile last week.
There has been growing disquiet from several members of the debt syndicate in recent months, with continued sliding profits and missed targets and after 20:20 Mobile breached one of its banking covenants earlier this year.
The banks are now expected to restore a £30m credit facility they withdrew after the covenant breach, to help 20:20 with trading.