Clover Technologies Lenders Hire Lawyers After Loss of AT&T Business --Update
July 15 2019 - 4:32PM
Dow Jones News
By Alexander Gladstone
Clover Technologies Group lenders have hired law firm Jones Day
after one of the mobile phone refurbisher's biggest customers said
it was taking the bulk of its business elsewhere, according to
people familiar with the matter.
Jones Day, which often represents creditors of struggling
companies, will advise the group on pending discussions regarding
restructuring some $650 million of the company's debt, the people
said.
Clover Technologies refurbishes and recycles electronic
equipment. Last week, its parent, 4L Holdings Corp., disclosed to
investors that one of the largest customers of its wireless
division has "decided to fulfill requirements for refurbished older
units by purchasing them directly from the OEM [original equipment
manufacturer] rather than having them refurbished by Wireless and
other vendors."
Clover, which is based in Illinois and is owned by
private-equity firm Golden Gate Capital, didn't name the customer
in the disclosure. However, two of the people said it was
AT&T.
In addition to the loss of business from AT&T, Clover said
it expected a loss of business from a customer of its imaging
business.
The company has hired law firm Kirkland & Ellis and
investment bank Jefferies to evaluate balance-sheet alternatives
and strategic options.
In preparation for the negotiations, the lenders hired Jones Day
on Friday, the people familiar with the matter said. This week, the
group also plans to hear pitches from prospective financial
advisers. Evercore and Houlihan Lokey have both been invited to
pitch, two of the people said.
In a downgrade of the company's debt last week, Moody's
Investors Service cited Clover's loss of customers and looming debt
maturities as key factors in it financial struggles. The ratings
firm also said Clover's imaging segment is likely to see revenue
erosion because of the "steady reduction in print volumes."
Earlier this year, Clover launched an effort to refinance its
term loan, which had about $700 million outstanding at the time.
However, the effort languished over pricing differences with
buy-side accounts, the people said.
The company also has been working to line up potential buyers of
some of its business units, people said.
As of the end of June, the company had $136 million of cash
outstanding on its balance sheet, according to its disclosure.
Clover declined to comment. AT&T and Jones Day didn't
respond to requests for comment.
Write to Alexander Gladstone at alexander.gladstone@wsj.com
(END) Dow Jones Newswires
July 15, 2019 16:17 ET (20:17 GMT)
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