Private Creditors Are Taking The Keys to More Failing Companies

Welcome to The Brink. We’re Silas Brown and Giulia Morpurgo in London, reporting on how private credit’s troubled borrowers are converting their debt to equity. We also have news on AMC Entertainment’s refinancing with Deutsche Bank’s Distressed Products Group. Follow this link to subscribe. Send us feedback and tips at debtnews@bloomberg.net.

The ranks of distressed private companies are swelling and more are being turned over — or seized — by their lenders.

Companies big and small gorged on ample funds from private credit firms in recent years. But some discovered that the debt became too much to bear through the pandemic, surging inflation and sharply rising interest rates.

The solution for 146 private companies in Europe: handing the keys to their lenders, according to a recent study by Goldman Sachs Group. In debt-for-equity swaps, lenders get a company’s equity and ownership in exchange for writing off part — or sometimes all — of its outstanding loans.

In one of the most comprehensive snapshots to date of strain in Europe’s rapidly expanding direct-lending universe, Goldman found that since 2023 alone, more than 100 of the region’s private borrowers have ended up in the hands of direct lenders.

Italian bottle-cap maker Tapí Group is the latest subject of a showdown over assets that’s turned a lender into a shareholder. Private credit firm Tikehau Capital took over one of Tapí’s holding companies in February by enforcing a claim on a €35 million debt, according to a Luxembourg corporate filing.