The deadline for firm bids for the €300m portfolio of bank debt for Tus Group has been extended to 15 March after Slovenia’s third largest retail chain received solid interest from a handful of interested parties, sources close to the situation said. “A handful of institutions submitted letters indicating where binding bids would be if they had more time to complete due diligence and secure investment approval,” said a source. “SPA discussions are progressing with interested parties,” he added.

“A number of investors are actively engaged and the bid deadline has been extended to 15 March to accommodate them,” said a second. Key stakeholders including lenders, the management and the founder and shareholder, Slovenian businessman Mirko Tus, remain supportive of a consensual restructuring, sources said.

As previously reported, the €300m portfolio of bank debt was put up for sale last year and comprises 77 bilateral facilities across 16 banks. The individual bilateral facilities are secured on real estate assets in Slovenia, Serbia and Macedonia.

Cohen & Company and Exito Capital are advising the bank consortium and are mandated to find an investor for the business.

Potential investors for the loan portfolio were initially sounded out in August, with indicative bids received at the end of that month. Interested parties subsequently moved into the due diligence phase with discussions advanced with a small handful of institutions. The profile of all prospective bidders at that stage was of long-term investors, willing to inject new capital and with experience in operational and balance sheet restructuring.

Sources consulted at the time noted that they viewed the loans as a distressed M&A sale of the business through the bank debt with the goal of realising future value though a sale of non-core assets and an operational turnaround. Recoveries were effectively based on the underlying value of the real estate, sources noted at the time, which included retail stores and distribution centres, with future upside coming from the operational turnaround as well as rental income improvement from the real estate business. A non-core asset sale programme over the past few years has included the disposal of Tus Group’s mobile services business Tusmobil, which it sold to KKR-owned Telemach in April 2015.

Once a winning bidder has been selected, the transfer of the loans and security is expected to be completed – following a debt-for-equity swap – in 2017. The restructuring could be implemented either via a Slovenian Compulsory Settlement Procedure, which requires the consent of 75% of creditors, or via an out-of-court consensual agreement.

In July 2015 Tus Group entered into a Preventative Restructuring Agreement with its creditors, resulting in an amend and extend of the outstanding bank debt. The majority of the lenders subsequently entered into a Cooperation Agreement, aimed at finding a long-term solution for the company. The bank consortium is receiving legal counsel from Slovenian law firm KRB.

Tus Group’s performance has been affected by the economic downturn in Slovenia since the financial crisis; the market is now showing signs of improvement but a recovery by the company is linked to a successful restructuring of its debt. For FY 2015 Tus Group reported sales of €510m and EBITDA of €20m. Management has prepared a new business plan out to 2020, which forecasts significant EBITDA growth from the implementation of various strategic initiatives.

Minaxi Kesra