LONDON, May 3 (Reuters) - Bankers are working on debt financings totalling around £400m to back a potential sale of UK human resources software company NGA Human Resources as a sale process kicks off, banking sources said on Wednesday.
Former lenders Goldman Sachs and Park Square took control of NGA, formerly known as Northgate Information Solutions, from owner KKR in a debt for equity swap late in 2015, backed with a £320m leveraged loan financing, according to Thomson Reuters LPC.
They have now decided to sell the business, hiring Goldman Sachs as advisers on the process, which is expected to see first round bids submitted by the end of May, the sources said.
A bank education process took place yesterday, following a meeting with lenders some weeks prior, the sources said.
Goldman Sachs, NGA and Park Square were not immediately available to comment.
Some £400m of debt financing equates to around 5.0 times Northgate’s approximate £70m Ebitda, the sources said.
Debt is expected to be in the form of either leveraged loans or high-yield bonds, mainly denominated in sterling, the sources said.
Bonds might be preferable as a covenant-lite loan could be a hard sell to investors, due to the company’s chequered past. High-yield bonds automatically come without maintenance covenants.
The business consists of two units, a UK mid-market business that is performing well and an enterprise business serving larger corporates, which is more of a turnaround story, sources said.
The preference will be to sell the company as a whole, but the sellers may accept bids for the units separately, the sources added.
KKR took Northgate private in 2008, in a deal that valued the company at £593m plus existing debt. KKR subsequently sold divisions including Northgate Public Services to Cinven for £320m in December 2014 and the managed services division to outsourcing group Capita for £65m in 2013 – leaving only NGA Human Resources.
NGA Human Resources helps organizations pioneer digital HR, master payroll, ensure compliance, unlock workforce data and deliver best-in-class HR operations, according to its website.
Editing by Christopher Mangham