ITALY/UK - Apax hands Damovo over to hedge funds

After Apax missed the final deadline to pay interest payments to the company's bondholders, it appointed advisor Houlihan Lokey Howard & Zukin to find a buyer within 30 days. Damovo is based in Scotland, with 45% of its business in the Italian public sector telecoms. The heavily indebted company has spun-off from Ericsson and since then it has struggled. It is understood that it was crippled by its 2005 refinancing which has replaced a large chunk of its leveraged finance package with EUR 358m of junk bonds.

Reportedly, a consortium of hedge funds managed by JP Morgan, Deutsche bank and Och Ziff Capital Management have agreed to purchase the company via the vehicle Noteholder Group and are using Lazard as advisor. The recovery plan foresees a loan of EUR 25m and a further injection of capital of EUR 50m to stabilise the business.

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