Last October, several investors in distressed debt situations took positions in the DIY chain, backed by private equity groups Apax Partners and Duke Street, in anticipation that the company might have to swap debt for equity in the group. Goldman Sachs and Och Ziff were both mentioned as possible investors in Focus DIY bonds.
In the first three quarters of last year earnings before interest, tax, depreciation and amortisation (Ebitda) fell 19%, prompting fears that the group could breach its lending covenants. Focus DIY’s senior banking facilities expire this April.
In a statement, Focus said it was “in discussions with a co-ordination committee of senior lenders and an ad-hoc committee of mezzanine note holders, as well as its shareholders, regarding the requirement to restructure its debt and equity”.
It added: “The Rothschild review will include the potential sale of the business and has the full support of all these stakeholders.”
Chief executive Steve Johnson said: “Actions taken by management have built up good sales momentum over the last six months. The board is now keen to evaluate the most appropriate ownership and financing structure for the group going forward. Rothschild will be evaluating all options to achieve this goal.”