Innovation Group
Innovation Group in Lender Talks to Wipe Out £100M Holdco PIK Debt, Halve £150M Opco Facility, Inject New £20M Super Senior Money
Tue 12/15/2020 11:49 AM
Relevant Document:
Fiscal 2019 Report
U.K. insurance software provider Innovation Group is in talks with its lenders regarding a debt restructuring package that would wipe out its existing £100 million holdco PIK debt, halve the £150 million opco senior facility and inject £20 million of new super senior money, sources familiar with the matter told Reorg. Continue reading for the EMEA Core Credit by Reorg team's update on Innovation Group's debt restructuring package, and request a trial for our coverage of many more debt restructuring situations in the region.
The company has embarked on another round of debt restructuring after its car insurance claims business was heavily impacted by the Covid-19 crisis, sources said. Last year, the group’s lenders at the time, Barclays, Barings, HSBC, Kartesia and UniCredit took control of the business after agreeing to swap debt for a £100 million holdco PIK, a £150 million opco senior facility, 23% equity and £50 million in super senior new money. The deal completely diluted the owner at the time, Carlyle.
The current coordinating committee could be underwriting the potential £20 million new money that would rank super senior to all existing and reinstated debt.
The company’s motor claims business has burned a lot of cash and is facing a going concern risk due to fewer car insurance claims as a result of the current health crisis and related lockdowns. The potential new money is required early next year, sources added.
Last year, the company sold a 70% stake in its French claims business to AXA France, which at the time was valued at about £20 million.
As part of the 2019 debt restructuring, the group would only pay interest on its debt between April 2019 and the subsequent three years if it could afford to do so, according to the company’s report for the year ended Sept. 30, 2019, filed with Companies House. The first net debt/EBITDA covenant under its main banking facility was due on March 31, which the company was at risk of breaching due to diminishing earnings.
The group had total bank debt of £295.5 million as of Sept. 30, 2019.
A debt profile of the company, as per its fiscal 2019 report, is below:
Revenue in fiscal 2019 totaled £97.5 million, while EBITDA amounted to £17.1 million. Of total revenue, £25 million came from the U.K. division, £36 million from the rest of Europe unit and £36.5 million from the rest of the world business, according to the report. The company incurred a £71.3 million loss for fiscal 2019 and had £65.9 million on its balance sheet at the end of the period.
Central Europe is the group’s largest business and its growth in the fiscal 2019 was limited due to lower volumes in its motor and property business, the report added.
Innovation Group Holdings Ltd. and its subsidiary Innovation International Holdings Ltd. were incorporated on Feb. 21, 2019, to acquire Axios Bidco Ltd. and all of its subsidiaries. On April 11, 2019, Innovation International acquired 100% share capital of Axios Bidco for a total consideration of £1, while £92.5 million of bank debt held by Axios Bidco and its subsidiaries were waived.
Innovation Group did respond to Reorg’s requests for a comment.
-- Jaishree Kalia
Fiscal 2019 Report
U.K. insurance software provider Innovation Group is in talks with its lenders regarding a debt restructuring package that would wipe out its existing £100 million holdco PIK debt, halve the £150 million opco senior facility and inject £20 million of new super senior money, sources familiar with the matter told Reorg. Continue reading for the EMEA Core Credit by Reorg team's update on Innovation Group's debt restructuring package, and request a trial for our coverage of many more debt restructuring situations in the region.
The company has embarked on another round of debt restructuring after its car insurance claims business was heavily impacted by the Covid-19 crisis, sources said. Last year, the group’s lenders at the time, Barclays, Barings, HSBC, Kartesia and UniCredit took control of the business after agreeing to swap debt for a £100 million holdco PIK, a £150 million opco senior facility, 23% equity and £50 million in super senior new money. The deal completely diluted the owner at the time, Carlyle.
The current coordinating committee could be underwriting the potential £20 million new money that would rank super senior to all existing and reinstated debt.
The company’s motor claims business has burned a lot of cash and is facing a going concern risk due to fewer car insurance claims as a result of the current health crisis and related lockdowns. The potential new money is required early next year, sources added.
Last year, the company sold a 70% stake in its French claims business to AXA France, which at the time was valued at about £20 million.
As part of the 2019 debt restructuring, the group would only pay interest on its debt between April 2019 and the subsequent three years if it could afford to do so, according to the company’s report for the year ended Sept. 30, 2019, filed with Companies House. The first net debt/EBITDA covenant under its main banking facility was due on March 31, which the company was at risk of breaching due to diminishing earnings.
The group had total bank debt of £295.5 million as of Sept. 30, 2019.
A debt profile of the company, as per its fiscal 2019 report, is below:
Revenue in fiscal 2019 totaled £97.5 million, while EBITDA amounted to £17.1 million. Of total revenue, £25 million came from the U.K. division, £36 million from the rest of Europe unit and £36.5 million from the rest of the world business, according to the report. The company incurred a £71.3 million loss for fiscal 2019 and had £65.9 million on its balance sheet at the end of the period.
Central Europe is the group’s largest business and its growth in the fiscal 2019 was limited due to lower volumes in its motor and property business, the report added.
Innovation Group Holdings Ltd. and its subsidiary Innovation International Holdings Ltd. were incorporated on Feb. 21, 2019, to acquire Axios Bidco Ltd. and all of its subsidiaries. On April 11, 2019, Innovation International acquired 100% share capital of Axios Bidco for a total consideration of £1, while £92.5 million of bank debt held by Axios Bidco and its subsidiaries were waived.
Innovation Group did respond to Reorg’s requests for a comment.
-- Jaishree Kalia
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