Bulb’s creditor Sequoia ignites insolvency row over £55m secured loan | Economic news

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The secured creditor of Bulb’s parent company has forced a last-minute change on its administrator as it seeks to protect a £55million exposure it has to the collapsed energy supplier.

Sky News has learned that Sequoia Economic Infrastructure Income Fund, a company listed on the London Stock Exchange, decided on Wednesday to block the appointment of AlixPartners as a director of Simple Energy.

City sources said Sequoia, which has loaned Bulb a total of £55million, has lined up Interpath Advisory – the former restructuring arm of the Big Four accountancy firms – to handle Simple Energy’s insolvency at the place.

The last-minute change is believed to have come amid a dispute over Sequoia’s demands over ongoing commercial and financial agreements between Simple Energy and Bulb, the latter now operated under the auspices of Teneo Restructuring.

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Bulb Energy on the brink

Ofgem, the energy watchdog, asked the courts on Wednesday to appoint Teneo as special administrator of Bulb – the first test of a new bailout scheme that will leave British taxpayers liable for a bill that could rise. amount to hundreds of millions of pounds. .

Formal confirmation of director appointments is expected for Thursday morning.

A person familiar with the Sequoia fund has suggested that AlixPartners was removed from his position as Simple Energy’s standby administrator due to doubts about his independence and fears of being too close to the special administrator.

These suggestions were roundly rejected by people close to both AlixPartners and the wider Bulb process.

According to an insider, Sequoia requested immediate repayment of a substantial portion of its loan, with the remainder being repaid in monthly installments.

Sky News revealed earlier this week that Sequoia’s objections to Bulb’s restructuring terms proposed by the government and Ofgem had become the latest hurdle in the appointment of directors.

In a stock market statement on Monday, Sequoia said it “learned via a news article that Bulb Energy Ltd favors entry into the special administration regime established by the Energy Act 2011.”

“If this were to happen, the investment adviser notes that Bulb’s parent company, Simple Energy Limited (“Simple”), would enter normal administration.”

A transition services agreement (TSA) is to be in place between Simple Energy and Bulb during insolvency, according to insiders.

Meanwhile, Lazard, the US investment bank, is expected to be asked by directors to undertake an auction of the business over the next few months.

Competitors such as Octopus Energy, OVO Energy and Shell Energy Retail are expected to review offers for Bulb, which has 1.7 million customers.

Bulb, which is Britain’s seventh-largest home energy supplier, is the latest in a series of more than 20 suppliers to collapse since the start of August.

Lazard and AlixPartners worked with Bulb before its collapse on aspects of its cash management and fundraising options.

A spokesperson for the Department for Business, Energy and Industrial Strategy said on Wednesday: “Energy regulator Ofgem, with the consent of the government, has filed a petition with the court. We do not comment on the ongoing legal proceedings.

“The special regime of administration is a long-established mechanism to protect energy consumers and ensure the continuity of energy supply in the event of a supplier failure.

“Bulb customers don’t have to do anything, there will be no disruption to current energy supply or prices, and credit balances are protected.”

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