Carlyle Mulls Handing Security Firm Praesidiad Over to Creditors

Private equity firm Carlyle Group is said to be leaning toward handing over portfolio company Praesidiad Group Ltd. to a group of creditors as part of a debt restructuring.

(Bloomberg) — Private equity firm Carlyle Group is said to be leaning toward handing over portfolio company Praesidiad Group Ltd. to a group of creditors as part of a debt restructuring.

The UK-headquartered security systems company and its creditors have been locked in negotiations over how to deal with debt coming due next year, with the most likely scenario being a lender takeover of the firm, according to people familiar with the matter, who asked not to be identified discussing private information. The ad hoc group of creditors comprises Alcentra, Bain Capital Credit, Capital Four and Cheyne, they said.

Despite the company’s operational turnaround in recent years, Praesidiad has faced headwinds from the rise in raw material prices such as steel and a slowdown in the European construction sector. That, combined with higher interest rates, makes it challenging to refinance its debt in full, the people said. No final decisions have been made.

Representatives for Praesidiad, Carlyle, Alcentra, Capital Four and Cheyne declined to comment. Bain didn’t respond to a request for comment.

Praesidiad’s liabilities include €290 million of term loans due in October 2024 and an €80 million revolving credit facility, according to data compiled by Bloomberg. In addition, it has $36 million of dollar-denominated term loans.

The debt incurred by Praesidiad was part of Carlyle’s leveraged buyout in late 2017. In 2019, the private equity firm brought in a new management team led by Dino Koutrouki as chief executive officer to focus on performance improvement.

The creditors are being advised by Moelis & Co. and law firm Simpson Thacher & Bartlett LLP, while the company is working with bankers at Houlihan Lokey Inc. and lawyers at Linkaters LLP, said the people.

Representatives for Houlihan Lokey and Moelis declined to comment. Simpson Thacher and Linkaters didn’t respond to requests for comment.

Sanctions Hurdle

Praesidiad will require a special license from the UK’s Office of Financial Sanctions Implementation (OFSI) to do a debt restructuring deal in the country, because the company counts Gazprombank JSC, currently under sanctions in the UK, among its lenders, according to some of the people familiar with the matter. Representatives for Gazprombank and OFSI didn’t respond to requests for comment.

Getting that green light may delay the completion of the transaction. The third-largest Russian lender has an exposure of less than €20 million to Praesidiad. Gazprombank is not currently sanctioned by the European Union.

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