PAI Partners Hires Citi as It Seeks M Group Services Exit, Sale Expected Later This Year

M Group Services Potential Sale from the EMEA Middle Market team 

Relevant Document:
FY’21 Annual Report

PAI Partners is seeking an exit from its portfolio company M Group Services and has hired Citi to explore a potential sale, sources confirmed to Reorg.

The U.K. infrastructure services company launched a £100 million term loan B fungible add-on at the end of last month to fund acquisitions and cash on balance sheet. The new loan will mature in 2025 and was priced with a SONIA+CAS+450 bps margin, 0% floor and OID at 99.

Some sponsors have already shown interest in the company even though the official auction is expected to start later this year, sources added.

Company turnover for the year ended March 31, 2021 dropped 3% year over year to £1.26 billion, while EBITDA fell 25% to £53.3 million. EBITDA margin declined to 4.2% from 5.5% over the same period. The company reported a loss of £2.4 million in the year.

The company’s Energy division was the most impacted by the pandemic as its activity contained the most consumer-facing work, such as gas mains replacement activity including the replacement of domestic supply pipes, smart meter installation and meter reading activities. The group achieved growth in turnover in both its Water and Telecoms divisions, while Transport recorded turnover slightly behind the prior year. Within the Transport division, the company reported good growth in Rail activity, which offset a larger reduction in Aviation work, according to its annual report.

The group used the Covid-19 Job Retention Scheme during the year ended March 31, 2021, receiving government grants of £23.6 million, and accessed the VAT deferral arrangements, deferring VAT of about £29 million to support its liquidity, which will be repaid during the year ending March 31, 2022.

The group had cash of £115.4 million and undrawn revolving facilities of £69.4 million as of March 31, 2021. Total bank loans at year-end were £360 million with finance leases of £9.4 million giving net third-party debt of £254 million at about 4.1x normalized EBITDA.

The company’s capital structure is below:

A breakdown of the company’s outstanding loans as of March 31, 2021 is below: (LIBOR was to be discontinued toward the end of 2021 and replaced with SONIA)