Thu 06/04/2020 07:02 AM
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While Bain Capital is working on its bid for Virgin Australia - the private equity firm and its credit arm, Bain Capital Credit have been shortlisted for the debt-laden carrier along with Cyrus Capital Partners - the firm is sitting on a distressed asset of its own in Australia -- Camp Australia as well as a distressed airline in the Maldives.

As previously reported by Reorg, Bain Capital is the majority owner of Trans Maldivian Airlines, which runs air taxi services in the iconic holiday destination, but has entered early negotiations with lenders to a $305 million five-year leveraged buyout loan after losing substantially all of its revenue due to Covid-19 restrictions.

Meanwhile in Australia, hedge funds and debt traders are circling holders of an A$245 million secured Term Loan B for the private equity firm’s outside school hours services provider Camp Australia. The company had already seen revenues impacted by increasing competition in the sector in Australia, and has now taken a further hit from lockdown restrictions and social distancing policies related to coronavirus in the country, said four sources close to the situation.

Goldman Sachs, which arranged the TLB, has quoted the first lien of the debt at around 80, said two of the sources, although the same sources also had heard indications of 70. With little information on the financials of the company currently available from Bain even to its investors, framing pricing for bids has proved difficult and no trades are yet heard, the sources said.

The company had EBITDA of around A$22 million ($15.7 million) as of December 2019, which had declined from above A$30 million at the time the TLB was completed, two of the sources said.

The drawn level of the TLB comprised a A$170 million 1st lien piece priced at BBSY+ 500 bps, and a A$62 million 2nd lien piece, with an undrawn A$10 million revolving credit facility at December, the same sources said.

Lenders to the 1st lien include Goldman Sachs, which was the MLAB for the facility, Deutsche Bank, ICG, Investec, Perpetual, and Taipei Fubon Bank, according to two sources.

Linklaters was adviser for the TLB, according to information on its website.

Allens had advised Bain Capital on the acquisition of Camp Australia when it acquired the company in 2017, at which point it had more than 700 schools across Australia.

That buyout, which valued Camp Australia at around A$400 million according to media reports, was backed by an A$167.5 million five-year buyout loan funded by 15 banks and led by Westpac Banking Corp and Citibank Sydney, according to a source with direct knowledge.

Bain subsequently attempted to refinance and expand the facility to an around A$415 million 1st and 2nd lien TLB, also led by Goldman Sachs, to acquire smaller Australian rival Junior Adventures Group, said the source with knowledge and one of the four sources, but the deal was blocked by the Australian Competition and Consumer Commission (ACCC) on concerns about higher prices to parents due to lack of competition.

The A$415 million TLB had been planned with a five-year first lien of around A$300 million priced at around BBSY+ 500bps, while the 2nd lien was expected to pay at least BBSY+ 900bps at the time, according to the same two sources.

The proposed deal emerged at a time when unitranches and Australian TLBs were proliferating on buyout deals, in a market previously dominated by commercial bank syndicated loans. The expanded Camp Australia courted controversy due to what was seen as aggressive use of synergies to derive a higher EBITDA for the loan, the two sources said.

Subsequent to the failed JAG takeover bid, Bain replaced the A$167.5 million commercial bank loan with the A$245 million TLB, all four sources said.

--Stephen Aldred
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