Senior lenders in KKR & Co's mine site trucking company Bis Industries are seeking to appoint an adviser, sources told Street Talk on Tuesday night.

It's understood a beauty parade will be held on Wednesday morning with PPB Advisory, McGrathNicol, Fort Street Advisers and Ferrier Hodgson called in to pitch their credentials.

As Street Talk revealed, Bis presented to its senior lenders on Friday, telling them that while the company is trading relatively well in a tough environment, it is keen to re-think the company's capital structure and long-term debt obligations. 

It's understood Bis told its banks that the company made $116 million in earnings before interest, tax, depreciation and amortisation in the 2016 financial year. 

While the trucking company may be performing better than its peers, there are questions about whether it can sustain a $1 billion deal load in light of the operating environment. 

While Moelis & Co-advised Bis and owner KKR are keen to explore their options, the lenders' move to appoint a debt restructuring specialist adviser shows they are also serious about the situation. 

BIS Industries provides mine site transport and processing for mining and resources companies, with operations in Australia and Indonesia. 

KKR tried to float the business on the ASX-boards in 2013, when the initial public offering market re-opened. However, the deal was pulled late in the process. 

The private equity giant which bought BIS and its then sister company Cleanaway for $1.83 billion in 2006. 

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Now that Spotless Group has pulled its laundries unit sale, fund managers will be re-assessing their thoughts on the business. 

Street Talk understands defence adviser Goldman Sachs was pulled in to help Highbury Partnership in trying to sell the laundries unit, taking the likes of Archer Capital through the diligence process. 

Expectations were that the unit could fetch up to $500 million - and Spotless shareholders reckon the whole point of the sale was that it could leave a cleaner takeover target for those tyrekickers sizing up the business. 

However, it is understood laundries' heavy depreciation charge sunk the sale. The unit's machines require ongoing maintenance capital expenditure, while the actual towels and linen stock typically needs to be replaced every three years according to Spotless' prospectus.

Citi analysts, for example, reckon that while the unit's EBITDA margins may be close to 30 per cent, the EBITA margin would be more like 5.8 per cent in the 2016 financial year. 

Now it is back to the drawing board for the contractor's shareholders. They've been through plenty in recent times, with the shares down 33.2 per cent in the past year and questions lingering about where the company can find its next leg of growth. 

Spotless is expected to present its full-year results on August 24. 

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The humble shipping container might not seems like a driver of innovation at first glance, but CHAMP Private Equity is betting that Melbourne-based group Containerchain can disrupt the logistics sector. 

Street Talk can reveal CHAMP is set to acquire 50 per cent of Containerchain to help fuel its expansion strategy. 

It's not your typical private equity buy-out with the firm to invest alongside Containerchain's founder, Tony Paldano, who will keep half of the company he founded in 2007.

The proprietary transaction was led by CHAMP's Singapore-based director Shane Gong and involves a highly structured debt and equity arrangement. 

Investment banking advisers were not engaged, however, CHAMP retained legal and accounting counsel during the diligence process.

The Containerchain purchase reflects a growing trend of private equity firms working one-on-one with company founders rather than buying businesses at auctions, and will mark CHAMP's second deal in CHAMP IV, following its acquisition of a majority stake in Pepperstone in March. 

The deal is also consistent with CHAMP's modus operandi of partnering with business founders and corporates on its portfolio companies. 

It's a similar pitch to what CHAMP did in 2006, when it teamed with Roy Manassen to expand food group Manassen Foods. More recently, it has partnered with Constellation Brands to build Accolade Wines and with London-based global marketing services giant WPP Group to grow oOh!media.

Containerchain has a unique container management software system that has a strong presence in Australia and Singapore.

The idea for the business was born when Paldano noted a growing dysfunction in the Melbourne empty container industry in 2007 and began nutting out a solution.   

Three years later at a forum of leading industry bodies, it was agreed there was an urgent need for technology to expose and share information between transport operators and empty depots, and improve container depot operations. 

Containerchain announced that it not only had the technology, but that its solution would also generate a new revenue stream for the struggling empty container depots.

It's understood the acquisition was signed this week, with completion by the end of the month. 

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It's less than one-month until first round bids for Arrium's prized Moly-Cop and already the dual-track sale shapes as an interesting battle between debt and equity investors. 

In the red corner is about half-a-dozen private equity firms, including offshore firms Blackstone Group, KKR & Co, Hellman & Friedman and Apollo Global Management. [Trade interest seems to be less of a factor.] 

In the blue corner is the initial public offering path, overseen by Deutsche Bank, Macquarie Capital and UBS, as first revealed by Street Talk, and a bunch of willing listed equity investors in Australia and offshore. 

Unless things change dramatically in the next three-months, you would have to tip IPO markets to knock off a leveraged buyout. 

It will all come down to conditions in the US high yield bond market versus the IPO market. 

Private equity firms already kicking Moly-Cop's tyres are looking to US high yield bond markets to help fund what is expected to be $1.5 billion-plus offers. Moly-Cop makes about half of its earnings in the United States and US dollars, which makes it an ideal target to tap US markets given the savings on swaps and other costs. 

However, despite investors globally seeking pockets of yield, the high yield bond market is an unwelcome place for private equity issuers at the moment. It's a cold fact that is crimping leverage buyout volumes globally and also impacting deal conditions in Australia. We have not seen a $1 billion-plus leveraged buyout in this market for a couple of years. 

Meanwhile the IPO path will live and die by wider equity market conditions, which are looking good at the moment, and the ability of listed equity fund managers to pay up for the business. The benchmark S&P/ASX200 index is trading at 16.6-times forecast 2017 financial year earnings, on a price-to-earnings basis, which is a very healthy multiple given most companies' outlook for growth and the wider economic environment. 

Moly-Cop is the crown jewel in Arrium's portfolio, which is why it's now the subject of a tussle between private equity funds and listed equity markets. Arrium's mining consumables unit, which is home to Moly-Cop, made $109 million earnings before interest, tax, depreciation and amortisation in the six-months to December 31, on $755 million revenue. 

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There's a late contender in the ASIC Registry sale. 

Less than a fortnight away from final bids, Street Talk can reveal Canada's Information Services Corporation is lining up for the asset. 

Sources said ISC, an ambitious little Canadian listed on the Toronto Stock Exchange, may be working with its much bigger countryman Brookfield on a potential bid. 

ISC brings the know-how to the auction. The Saskatchewan-based company is a provider of key search and registry solutions, which is 31 per cent owned by the government of Saskatchewan and was only listed in 2013. 

ISC specialises in government registry contracts and has form with M&A, having acquired Corporate Services Ltd in October 2015. Its business includes land, title, corporate and personal property registries, as well as search services. 

Which makes it sound like a good fit for the federal government's ASIC Registry. 

The government is seeking a new partner to run a big IT upgrade at ASIC Registry, and operate the business on a day-to-day basis. 

After a drawn out process - registrations of interest were this time last year - the government and adviser Greenhill & Co are expecting final offers on August 29. 

ISC's group is expected to run up against ASX-listed Computershare, the recently-acquired Veda Group and Borealis Infrastructure-owned Teranet, among other candidates.

Minister for Finance Mathias Corman said in April that the process had led to six indicative bids from a "broad range of private sector bidders". 

He said the government would retain ownership of ASIC Registry's data. 

ASIC Registry manages 31 separate registries, including the Companies Register and Business Names Register, which together contain more than 10 million records. 

The big question is how much of ASIC Registry's revenue will go to the new counterparty and how much will stay with the government as tax.

Dealmakers across the market will also be keeping an eye on the Foreign Investment Review Board and any decision it has to make around the process, in the wake of the Ausgrid debacle. 

Elsewhere, research sales trader Alex Apoifis is leaving JPMorgan, as revealed by Street Talk on Tuesday.

Apoifis is set to join value-based Australian equities manager Auscap Asset Management as its chief operating officer.

Apoifis has been with JPMorgan since 2007 in equity capital markets and Asian and Australian equity sales, based in Sydney and London. 

Auscap Asset Management was founded in 2012 by Tim Carleton and Matthew Parker, and manages the Auscap Long Short Australian Equities Fund which targets solid absolute risk-adjusted returns.

 

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