Brighthouse bondholders ‘set to take ownership’
Rent to buy retailer Brighthouse could shortly change hands, with its bond holders swapping dents for shares, it has been reported.
Sky News says BrightHouse's bondholders have set an informal deadline of 6 November to strike a deal to restructure its balance sheet.
Under the plan, which is led by Alteri Investors - a unit of Apollo Management which holds roughly 30% of the retailer’s bonds - the consortium of investors would exchange about half of its existing £220m of debt for equity.
The remainder of the existing debt, which matures next May, would remain on BrightHouse's balance sheet.
Alteri has reached an agreement in principle with the other major bondholders, which include Highbridge Capital Management, HSBC and Oceanwood Capital Management, according to Sky News.
Current majority shareholder Vision Capital would see its stake drastically reduced or eliminated.
Last week, the Financial Conduct Authority ordered Brighthouse it to repay nearly 250,000 customers for failing to act as a ‘responsible lender’. More than 80,000 people had not been properly assessed by BrightHouse for their ability to repay their loans, leaving the chain with a bill for £15m.
Brighthouse has seen profits crash after the FCA imposed more detailed consumer application requirements as part of a wider investigation of the sector. This saw a major drop in new customers.
The company had been criticised for its high interest rates and late payment penalties. In response it introduced variable rates where shoppers can pay off the price quicker. However a Fortana leather sofa (pictured) costing £863.51, including £60 delivery, costs £1107.08 if paid over a year. Over three years the cost rises to £1716, with an APR of 69.9%.
In addition customers must have accidental damage, fire and theft insurance. If bought from Brighthouse this costs £1.34 a week. An optional care package costs £2.05 a week. If both were signed up for, the Fortana over three years would eventually cost £2,244.84.