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.