Bain Capital, Madigan on Jon Adgemis’ $500m refi for PHG
Global juggernaut Bain Capital and Sydney-based private debt investor Madigan Capital are in discussions to put together a $500 million debt refinancing for Jon Adgemis’ Public Hospitality Group, Street Talk can reveal.
It is understood Bain and Madigan are jointly negotiating terms to lend against a handful of PHG’s pubs and hotels, steering clear of a headco-level loan. Sources said nothing had been finalised as of Monday, but the duo was well-placed to sign a deal in the coming weeks.
Should Bain and Madigan succeed at PHG, it would build on the blooming relationship between the two firms, which has seen them work together on one property transaction so far. Bain is understood to have its local special situations unit running point on the deal, which is best known for buying Virgin Australia during the pandemic and has access to a $US2 billion fund raised in mid-2022.
While Bain and Madigan prepare to check in at PHG, long-suffering senior lender Macquarie Capital has secured its exit, selling to Deutsche Bank. Sources said Macquarie’s first-loss piece had been picked by opportunistic credit investor Muzinich & Co, which lends to about six assets in the PHG portfolio.
In terms of asset-level debt, Justin Epstein’s Gemi Investments is a lender to other hotels and pubs owned by the group. Rounding off the debt stack is Archibald Capital, led by Ben Madsen, which owns PHG’s debt at the holding company level after failed attempts to inch up higher in the capital structure.
Losses expected
Despite the progress with the refinancing, PHG’s troubles look far from over.
Sources said, while Deutsche’s newly acquired debt should be fine, Muzinich, Gemi and especially Archibald may cop significant losses on their investments in the group.
On the brighter side, in addition to Macquarie Capital, convertible note holders from early 2022 are expected to be paid back once the refinancing is done. That includes Alex Waislitz’s Thorney Group and Lance Rosenberg’s Gleneagles Group.
As revealed by this column, Adgemis commenced discussions for the refinancing in July 2022, as the business struggled from a COVID hit to earnings, and higher interest rates swelled it debt load while keeping the IPO market firmly shut.
The ensuing negotiations drew out players from all walks of debt capital markets. Ex Bank of Queensland George Frazis offered some advice on the refinancing. Hedge fund Davidson Kempner’s Hong Kong dealmakers flew into Sydney to check if there was a deal to be had. The likes of Nomura and Oaktree spent some time in the data room, while Archibald tried to buy Macquarie’s slice.
