(Bloomberg) -- Bondholders of Intrum AB who considered teaming up for debt talks with the Swedish company have split into different groups given the varied interests of the investors depending on the maturities of the notes they hold, according to people familiar with the matter.
A group of bondholders with notes due in 2024 and 2025 have picked Weil, Gotshal & Manges LLP as legal adviser and Lazard Inc. as financial adviser, said the people, asking not to be named discussing private information.
Intrum, which borrowed heavily in the low-interest rate era to buy portfolios of consumer loans, is grappling with higher borrowing costs and a slowdown in business. The debt-collection company this month hired Houlihan Lokey Inc. and law firm Milbank LLP to help overhaul its €5.4 billion ($5.8 billion) debt pile, with maturities ranging from July this year to March 2028.
While Intrum has cash from the sale of a third of its portfolio of non-performing debt to Cerberus Capital Management, the question remains whether the company will repay what it owes this year or if that will also be included in a potential restructuring.
Though the firm has sufficient liquidity to pay almost all of its debt maturing this year and next, Chief Executive Officer Andres Rubio said he’s not planning on running its cash down to zero and talks with creditors will start in the coming weeks.
“It’s the full-fledged options that are on the table: extensions, current payoffs, different levels of restructuring,” Rubio said on a call with investors.
Fresh Funds
For now, Intrum isn’t planning on including equity in that mix and the company may announce capital partnerships later in the year that have a “quite dramatic” impact on its finances, Rubio said.
The aim of the bondholders in the group advised by Weil is to propose a solution for the bonds due in 2024 and 2025 that involves the creditors providing fresh funds to assist the company in dealing with the broader capital structure, according to the people familiar with the situation.
Representatives for Weil and Intrum declined to comment. A Lazard spokesperson didn’t immediately reply to a request for comment outside of office hours.
Intrum’s bonds and shares have plunged in the past year. The stock is down about 70% in that period, giving the company an equity value of 3.4 billion kronor ($325.6 million).
--With assistance from Love Liman and Giulia Morpurgo.
(Adds Lazard as bondholder group choice for financial adviser.)
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