Electronics-rental company Grover Group is nearing a restructuring deal that will see some creditors take over the majority of the equity of the German startup.
Investors led by Fasanara Capital and M&G are poised to inject €30 million ($34 million) to €35 million in fresh funds, thereby taking over the bulk of the equity, according to people familiar with the matter. Existing shareholders will retain a stake of between 5% and 10%, the people said. A portion of the existing debt will also be subordinated, separate people familiar said.
The restructuring deal still needs a final court decision to go through. The company’s debt is being overhauled using a so-called StaRUG process, named for a regulation that went into effect in 2021. It allows companies to restructure more easily by giving courts the power to implement a plan even if it doesn’t have consent from all groups of stakeholders.
While three stakeholder groups approved the deal with a 75% majority, the current owners did not. It is now up to the court to decide whether to overrule the owners’ opposition.
The company, which specializes in renting electronics like smartphones and tablets to consumers, declined to comment while the restructuring process is ongoing. Spokespeople for M&G and Fasanara declined to comment.
Without emergency funding the troubled German startup is facing default. Fasanara Capital said late last year that it could terminate an agreement to provide liquidity if shareholders back a plan to sell the company back to its founder.
Founder Michael Cassau has been seeking financing from Fortress Investment Group to fund a possible deal, which may still be considered after the court process, some of the people said. A spokesperson for Fortress didn’t immediately respond to a request for comment.
The investor fight pits Cassau against the company’s management and Fasanara over control of the startup that was valued at more than $1 billion in 2022. Grover doesn’t generate enough revenue to cover its liabilities and its enterprise value covers less than half of the outstanding debt, Fasanara said in a December letter.
Higher interest rates and increasingly scarce venture capital funding have led to a number of boardroom clashes at European startups this year. A feud at insurance tech firm Wefox Holding AG led to the ouster of its interim chief executive backed by its biggest investor, Mubadala Investment Co. Separately, Mubadala took full control of Getir Perakende Lojistik AS after a power struggle at the Turkish grocery delivery service.
Source: Mint