Investment funds acquire Camp Australia debt in anticipation of restructuring process

A number of investment management funds have been acquiring debt in Australia’s largest outside school hours care (OSHC) provider, Camp Australia in anticipation of a flagged restructuring process which is expected to commence in April 2022. 

As reported by the Australian Financial Review (AFR), Apollo Global Management, one of the world’s largest private equity funds, has been acquiring senior debt from existing lenders to ensure their participation in any restructuring discussion is ensured. 

Apollo’s move follows leading Australian private equity funds Tanarra and Allegro who joined forces earlier in the year to acquire $4.0 million of Camp Australia’s term loan B from Goldman Sachs for about 65c on the dollar and a separate purchase by Allegro in 2021 of $12.5 million from Morgan Stanley at the same price. 

Camp Australia, like much of the OSHC sector, was hit particularly hard by the COVID-19 pandemic which saw extended lockdowns shut schools and families urged to work from home, both of which negated the need for before and after school hours care services. 

The Group’s holding company had $335 million of loans and borrowings as at 30 June 2021, including a $235 million bank debt facility with transches maturing in December 2022 and December 2023. 

Senior leaders at Camp Australia have been trying to extend an agreement that has seen interest and principal repayments postponed but with some lenders indicating an unwillingness to agree ahead of its expiration next month a restructuring event looks increasingly likely. 

As the Australian economy continues to bounce back from the COVID-19 disruptions, investment managers sensing an opportunity to build exposure to a Camp Australia recovery have been acquiring debt at cents on the dollar ahead of the restructuring which is expected to take the form of a debt to equity swap. 

Notably, Bain Capital Private Equity, who acquired the Group in 2016 for an undisclosed sum, have exited the situation with them no longer having any presence on the Camp Australia board and an equity investment that is now valued at close to zero. 

As at 31 December 2021 Camp Australia had 555 services with 89 per cent rated meeting or exceeding the National Quality Standards.

To access the AFR coverage of this story please see here.