Direct lenders, including Antares Capital, Blue Owl Capital, and KKR, are preparing to assume control of insurance claims manager Alacrity Solutions, marking the latest restructuring within the private credit market, according to a Bloomberg report citing sources familiar with the situation.
BlackRock, which acquired a 70% majority stake in Alacrity less than two years ago, is set to relinquish its ownership to the lenders. The investment firm had initially purchased the stake from Kohlberg, investing approximately $560m in equity through its Long Term Private Capital strategy. This equity stake will now be completely wiped out, the unnamed sources said.
At the time of BlackRock’s acquisition, Alacrity was already burdened with significant debt, including a $1bn unitranche loan from direct lenders and over $500m in junior capital provided by Goldman Sachs Asset Management (GSAM).
Alacrity, which manages insurance claims through a network of adjusters, faced challenges as weather-related claims declined. Additionally, more insurance companies have opted to bring claims adjustment services in-house, reducing Alacrity’s client base.
Under the proposed restructuring plan, Alacrity’s first-lien lenders will take ownership of about 90% of the company, while GSAM, the junior-capital provider, will receive the remaining stake.
The restructuring will see Antares, Blue Owl, KKR, and other lenders convert roughly half of their loans into equity. These lenders will also contribute approximately $175m in new financing, split between a revolving credit facility and a delayed-draw term loan.
Following the restructuring, Alacrity’s capital structure will comprise a $450m term loan and $250m in preferred equity.
Alacrity announced in a press release that it had reached a new financing agreement with its financial partners. The deal is expected to close in the first quarter, and the company emphasised that its operations will continue as usual during the transition. However, an Alacrity spokesperson declined to elaborate on the financing details.
This development is one of several significant restructurings in the private credit sector over the past year, as higher interest rates put pressure on companies and private credit managers alike. Last year, educational software company Pluralsight underwent a similar restructuring, with lenders assuming control of the business.
Market observers have cautioned about growing financial stress as interest-rate relief remains elusive. While private lenders often mitigate risks by quietly amending loans and implementing other behind-the-scenes measures, these strategies have faced increasing challenges in recent months.
BlackRock is working with Evercore on the Alacrity restructuring, while Alacrity itself is being advised by Centerview Partners and AlixPartners. Latham & Watkins and FTI Consulting are advising the unitranche lenders.
