GIC takes stake in LatAm outsourcing player Atento in debt-for-equity deal

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A group of creditors led by Singapore sovereign wealth fund GIC Pte and HPS Investment Partners has taken control of Latin American call centre business Atento after swapping their notes for Bain Capital’s shares of the outsourcing company.

The debt-for-equity deal will give HPS a 25 per cent stake in Atento, while GIC and Farallon Investment Management will own 22 per cent and 15 per cent, respectively, Atento said in a statement Thursday.

Atento claims to be the largest customer relationship management and business process outsourcing provider in Latin America.

The deal, which will transfer nearly all of the Atento shares held by Bain Capital-controlled Atalaya Luxco Pikco, is subject to regulatory approvals in Brazil and Mexico.

HPS will have the right to propose two directors to Atento’s board, while GIC and Farallon will each get to propose one director, the statement said.

Bain Capital had acquired Atento, the call centre arm of telecom firm Telefonica SA, in 2012 for over 1 billion euros ($1.1 billion). It proceeded to list the business in 2014 on the New York Stock Exchange and had raised a payment-in-kind (PIK) loan, a high-risk loan that allows borrowers to pay interest with additional debt instead of cash, on its remaining stake. The PIK notes were set to mature on May 30, 2020, according to an SEC filing.

According to a Bloomberg report, falling margins at Atento’s core Brazil business and other operational challenges caused its stock to dive 90 per cent over the course of five years. This rendered Bain’s two-thirds stake in the company to be valued at nearly $50 million, far below the value of the loans it had secured against its stake in Atento.

Atento’s market cap stood at $72 million as of market closing on Thursday.

Earlier this week, the company reported a first-quarter net loss of $7.4 million, narrower than a $45.6 million loss a year ago. Its net debt stood at $564.3 million.

In its statement Thursday, the company pointed to its efforts to implement a restructuring plan to improve margins via a combination of a better revenue mix, the elimination of low-margin work and better cost management.

The COVID-19 viral outbreak has spurred business disruptions globally as many countries imposed lockdowns leading non-essential workers to work from home.

“With $160 million in total liquidity, Atento currently has the necessary financial resources to continue delivering customer services and solutions as well as effectively maintain health and safety procedures, including having over 60 thousand employees working at home,” it said.

The global business process outsourcing market was valued at around $92.25 billion in 2019, according to data from Statista. That was expected to reach nearly $406 billion by 2027, according to a February report by Grand View Research.

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.