Exponent's HSS Hire secures £245m refinancing

Kenny Wastell
20 June 2018

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Exponent Private Equity-backed listed portfolio company HSS Hire, a UK-based industrial tools and services supplier, has secured a ТЃ245m refinancing deal.

The development follows a difficult 2017 for HSS, in which it generated adjusted EBITDA of £1.8m, down from £67m at the time of its IPO, according to publicly available documents. However, it recovered from an adjusted EBITDA loss of £7.3m in the first half of the year, to post adjusted EBITDA profit of £9.1m in H2.

HSS closed 55 branches throughout the course of the year, renegotiated terms with its suppliers and reduced its central headcount by around 100, according to the documents.

The transaction includes a £220m term loan facility provided by HPS Investment Partners priced at between 700bps and 800bps over LIBOR, dependent on HSS's net debt leverage ratio. Of this amount, £200m will mature in June 2023, while £20m will mature in December 2020, although the latter portion includes a provision enabling it to be settled before maturity.

HPS has also secured an equity warrant amounting to 8.5 million new ordinary shares that can be exercised within five years, subject to conditions including repayment in full of the term loan facility.

The remaining £25m is a revolving credit facility provided by HSBC Bank and National Westminster Bank. It is priced at between 250bps and 300bps over LIBOR, dependent upon net leverage, and matures in December 2022.

Previous funding
A consortium consisting of Aurigo Management, Perry Capital, Bank of Scotland Corporate, RIT Capital Partners and Och-Ziff Capital Management Group bought HSS from 3i for £310m in 2007. Exponent then bought the company, at the time generating EBITDA of £39.9m, in a secondary buyout in 2012.

Exponent then made a partial exit from HSS in 2015, when the company floated with a market cap of £325m. Following the IPO, the GP remained the company's largest shareholder with a 50.4% stake, a stake it still held as of December 2016.

Company
Founded in 1957 and headquartered in London, HSS rents equipment and tools to trade and DIY customers.

People
HSS Hire – Steve Ashmore (CEO); Paul Quested (chief financial officer).