Managed services provider Azzurri Communications is in refinancing talks with a consortium of seven banks after pursuing a ‘buy and build’ strategy that left the company with debts of around £115m, Mobile understands.
Sources say the banking consortium, led by Lloyds, is proposing a debt for equity swap. An agreement is expected to be reached this week. One banking source said: ‘As it stands, the business is doing reasonably well, but it is difficult to support that level of debt in a business.
‘The question is, how do you get around that, and the solution is for the lenders to take on an increased stake.’
Mobile understands all seven banks are considering taking an equity position in the company, leaving Azzurri’s owner, private equity investor Silverfleet Capital, with a reduced position.
One source said: ‘The economic environment has impacted on Azzurri and they took on a level of debt that did not account for the protracted economic pressure we are all under these days.’
A telecoms analyst told Mobile: ‘The bank debt expires at the end of the year and I suspect the banks used the debt deadline to agree a restructuring of the debt.’
He added: ‘Azzurri pursued a buy and build strategy. For some companies this strategy can create problems if they pay too much for their acquisitions, rely too heavily on bank debt or fail to consolidate their acquisitions.’
Azzurri has pursued an aggressive buy and build strategy since it was formed in 2000, making a total of 16 acquisitions by 2008. In 2006 it was acquired by Silverfleet Capital. The company employs over 700 staff.
Azzurri Communications provides a range of IT solutions that include mobile, voice, data, consultancy, networking and digital print. It also offers communication audits for large corporations and telecoms management services.
Clients include B&Q, Hanson, Tesco, Trinity Mirror and University College of London Hospitals.
Last month, the company clinched a four-year, £2.5m deal to oversee 4,300 telecoms connections for Leicestershire County Council.
An Azzurri spokesman said: ‘We are in the final stages of completing the refinancing of the business – a planned process that has been ongoing for the past few months and is a matter of public record. As such, we are not in a position to comment on how it is going to be restructured until all is signed and sealed.’