OcUK Parent Company in Financial Trouble?

[Psiko]

Looks like the lender to Case King, the owner of OcUK, might be taking the keys. Doesn’t sound like good news. Hope it doesn’t have any implications for the forum!

Source: https://www.finance-magazin.de/deal...ity-swap-bei-ex-rivean-asset-caseking-188291/

Debt-Equity-Swap bei Ex-Rivean-Asset Caseking​

The Pro Gamers Group, formerly known as Caseking, from HAL Investments is moving into the hands of a private debt fund. What happened after the exit of the former private equity owner Rivean?

 

[Participant]

Can't read the whole article, but it doesn't necessarily signal anything awful. These small companies are passed around PE and debt holders like you know who at a you know what.

 

[Diddums]

So not much then, this has tax dodge written all over it.

Debt-equity swap in the summer time: As can be seen from an entry with the Federal Cartel Office, the debt fund Arcmont has taken over the Pro Gamers Group from the portfolio of the Dutch investment company HAL Investments. The Berlin company produces and sells, among other things, gaming accessories and brings together brands such as Noblechairs, Ducky and Endgame Gear under the company umbrella.
HAL acquired the Pro Gamers Group - or Caseking - from Rivean Capital (then Gilde Buy Out Partners) in 2021. Today Caseking is one of five online retailers in the Pro Gamers Group. The financial investor puts the share taken over at 64.3 percent.
According to Rivean, the Pro Gamers Group was already a growth company before Corona. But participation benefited particularly in 2020 and in the following years from the Corona crisis and the associated fact that more people stayed at home and played video games. During Rivean's holding period, Pro Gamers' profits quadrupled. When it exited HAL in autumn 2021, Rivean received six times the stake, which corresponded to an enterprise value of 820 million euros, as partner Matthias Wilcken reported in an interview with FINANCE at the time.

Pro Gamers Group with major declines in sales
What has gone wrong since then that the financing debt fund now has to take the reins? Neither the company nor the two financial investors HAL Investments and Arcmont have responded to a request from FINANCE. The most recent figures available for the 2022 financial year - the year after the HAL takeover - at least indicate the direction in which the company could have developed after Rivean's exit.
Example of sales, the 2022 consolidated financial statements say: “In this difficult environment, the Pro Gamers Group recorded a decline in sales of 23.6 percent compared to the previous year, which is typical for the overall market.” The company cites “reluctance to buy among end consumers due to the development of inflation” as the reason. Sales revenue in 2022 amounted to around 443 million euros. In the previous financial year, which ended in April 2021, sales revenue was 627 million euros, as HAL announced on the occasion of the takeover at the end of June 2021.
The profit figures also don't bode well. According to the consolidated financial statements, the operating loss in 2022 was around 75 million euros, and the consolidated annual loss was almost 98 million euros. The group Ebitda was at least positive at almost 11 million euros.
Would the Pro Gamers Group have torn up the Covenant?
In addition, there is an unspecified financial covenant “as part of debt financing”, but it is probably a leverage covenant, as is usual in the market. The financial statements state: “In the past financial year, the financial covenant was fulfilled after adjusting the conditions and the planning is aimed at ensuring that the relevant credit requirements will continue to be adhered to in the future.” In other words: renegotiations have already taken place with the lenders.

 

[Psiko]

Great to see the full article, thanks!

It’s not a tax dodge. Arcmont is a well known lending fund. They do not like to own businesses, they like to lend to them. They will only take the keys if other avenues have already been explored. Equally, HAL (no idea who they are) would not want to lose the business if they could keep hold of it. To get to this stage means negotiations have broken down and HAL is unwilling to put in new money.

Most likely there is a liquidity issue as the covenant would be easy to game (by adjusting EBITDA within the limits allowed) and HAL would probably have cured any breach. With product prices increasing so much, the company might be suffering a working capital squeeze. Plus they have a €300m loan, which would have been floating rate and rates have increased massively since 2021, to service.

Applying to the German courts for the debt to equity swap could also be a negotiating tactic from Arcmont, to force HAL to put in some cash. Time will tell!

 

[darael]

 

[kration]

Very nice people, just don’t owe them money. Given the theme of avatars in this forum it may be apt...

 

[Diddums]

Ah well, Gibbo will be driving a Yaris by the end of the year.

 

[Chojin]

Surely this is a missed opportunity for Haribo diplomacy.

 

[Malevolence]

Ah well, Gibbo will be driving a Yaris by the end of the year.

Thought he already had one?

 

[dlockers]

Ah well, Gibbo will be driving a Yaris by the end of the year.

He already has a Yaris

 

[LiE]

He already has a Yaris

Cost of living hitting hard.

 

[Kenai]

This is what happens when you restrict access to the MM. People can't sell their old stuff, they don't buy new stuff from OcUK, the whole bloody group of companies starts to crumble.