Innovation Group Hires Deloitte to Review Debt Load

(Bloomberg) -- Innovation Group has hired Deloitte LLP as an adviser to help it negotiate with its creditors, according to people familiar with the situation.

The software-solutions provider has initiated talks with its lenders to rework its capital structure and find new funding, according to the people, who asked not to identified because the discussions are private. Innovation posted a loss of 92 million pounds ($121 million) for the year ended Sept. 30, according to its earnings report filed at the U.K.'s Companies House.

Officials from the Whiteley, U.K.-based company and its lenders met last week to discuss relaxing covenants and to provide new money, said the people.

The negotiations may have spooked creditors. When the talks started, some of Innovation's debt was put up for sale at a knocked-down price, a different person familiar with the matter said. Several pieces of the 125 million-euro ($146 million) first lien term loan B provided to Axios Bidco, a Carlyle-owned SPV for Innovation Group's acquisition, were offered at 52.5 cents on the euro on Tuesday afternoon, the person said.

That some of the portions of the loan on sale are bigger than 1 million euros suggests that sellers may be the original bank lenders, the person said. Usually sellers split loan holdings into smaller pieces of about 100,000 euros, the person said.

Funding Discussions

Officials at Carlyle and Deloitte declined to comment on debt talks. A spokeswoman for Innovation Group said the company's “management team is continuing to discuss incremental new funding to support its growing businesses.”

The company's debt surged 19 percent to 753 million pounds in the year through Sept. 30, according to its latest filings. While its earnings before interest, tax, depreciation and amortization grew 59 percent to about 31 million pounds, its cash holdings fell 4 percent to 107 million pounds. Interest expenses amounted to 64 million pounds.

Innovation Group had drawn 316 million pounds of bank debt as of September, with only 2.3 million pounds of its total 75 million-pound revolving credit facility remaining undrawn, the filing shows. Borrowing also includes 361 million pounds of 12 percent payment-in-kind notes due in 2025, the filings show.

Deloitte advised Carlyle Group LP, when it acquired Innovation Group in 2015 for 500 million pounds and took it private.

To contact the reporters on this story: Antonio Vanuzzo in London at avanuzzo@bloomberg.net;Laura Benitez in London at lbenitez1@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Abigail Moses

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