Creditors to assume control of KKR-owned Bis Industries
Australian mining services provider Bis Industries has reached a debt-to-equity restructuring agreement with creditors that will see current owner KKR relinquish its majority position.
The transaction, which is expected to be completed within the year, will result in the company reducing its total debt by around 80% or A$1 billion ($790 million). Bis reportedly began restructuring talks as early as August 2016 with some A$900 million in debt.
The creditors taking control of the company comprise senior lenders and payment-in-kind (PIK) noteholders. A credit fund managed by The Carlyle Group, Metrics Credit Partners, and Varde Partners are among the senior lenders. Other Bis lenders have included Bain Capital, Goldman Sachs, and Sumitomo Corporation.
According to a report last month by Debtwire, the holders of A$890 million in senior secured syndicated loans will obtain a 96% stake in the company, while PIK creditors will take a 4% share. KKR is expected to remain a minority shareholder.
KKR formed Bis in 2006 after paying A$1.83 billion for Brambles Industrial Services and Cleanaway Australia. Bis was valued at around $1.8 billion including debt in 2012 when the private equity firm attempted to sell the company after difficulties refinancing loans related to the acquisition.
The deal was KKR’s first acquisition in Australia and represented the largest ever management buyout in the local market at that time. The GP is believed to have considered an IPO for Bis as recently as 2013, with an aim to use the proceeds to pay down company debt.
“The proposed capital structure represents a generational reset of our balance sheet and opens up a range of exciting opportunities for our business,” Bis CEO Brad Rogers said in a statement. “Bis has always been a strong operator with a resilient business model and long-term, blue-chip customers, but our capital structure wasn’t suited to the market conditions we’ve seen in the past few years.”
Based in Perth with offices across Australia and Indonesia, Bis specializes in logistics and materials handling for major resource industry clients, including BHP Billiton and Rio Tinto. Operations encompass the coal, gold, iron, steel and base metal sectors.
Recent momentum in commodity prices is expected to result in increased private equity exposure to the Australian mining services space.
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