By Oliver Hirt, Abhinav Ramnarayan and Arno Schuetze
ZURICH/LONDON/FRANKFURT (Reuters) – U.S. buyout group KKR
Selecta operates self-service coffee and convenience food dispensers, which are at private businesses as well as other locations such as train stations and hospitals. The coronavirus pandemic has taken a toll on the business because of lockdowns to halt the spread of the virus.
KKR, which took a controlling stake in Selecta in 2015, will present a proposal to Selecta’s creditors and management shortly to help to support the business, the sources said.
The plan is expected to involve 150-200 million euros in new loans granted by KKR to the company, one of the sources said.
But before KKR can provide new funds it will need a nod from Selecta’s bondholders, who are expected to seek a share in the company’s equity, another source said.
KKR and Selecta declined to comment.
Selecta has had to carry debts since Allianz Capital bought it in a leveraged buyout in 2007, a deal that added 690 million pounds ($850 million) of debt to its balance sheet.
Selecta’s biggest outstanding bond – a 770 million euro ($848 million) 5.875% Feb 2024 note – was trading at a cash price of 35 cents on the euro on Wednesday.
Any bond trading below 60 cents on the euro is considered distressed territory by bond investors.
KKR is working with investment bank PJT Partners, while Selecta’s bondholders have hired Perella Weinberg, the sources said. The investment banks declined to comment.
The buyout group recently installed its senior adviser Joe Plumeri as Selecta chairman, while KKR Capstone director Christian Schmitz became its new chief executive.
(Graphic: Selecta debt drops deep into distressed territory – https://fingfx.thomsonreuters.com/gfx/mkt/yzdpxdrqapx/selecta%20chart.png)
Selecta is expected to switch from food and coffee to providing masks and hand sanitisers through its vending machines as companies have done in Japan, a source close to its restructuring said.
The company has already started exploring ways to make up for the loss of business in offices and train stations, sources said.
“More and more people are going to be comfortable working from home. Selecta will have to become a smaller business and reinvent itself,” the source close to the restructuring said.
Last year, Selecta explored a possible listing on the Swiss stock exchange.
(Reporting by Oliver Hirt, Abhinav Ramnarayan and Arno Schuetze. Editing by Jane Merriman)
