(Bloomberg) – Electronic leasing company Grover Group is about to undergo a restructuring agreement that will allow some creditors to take over most of the equity of the German startup.
According to people familiar with the matter, investors led by Fasanara Capital and M&G are ready to inject €30 million ($34 million) into new funds, thus taking over most of the equity. The people said existing shareholders will retain 5% to 10% of their shares. Familiar people say that part of the existing debt will also be subject to obedience.
The restructuring transaction still requires the final decision of the court to be completed. The company’s debt is being overhauled using the so-called Starug Process, named after a statute that will take effect in 2021. It allows companies to reorganize more easily by granting the court the power to implement the plan, even if the plan does not have the consent of all stakeholders.
Although the three stakeholder groups approved the deal with a 75% majority, the current owners have not. Now, the court decides whether to overturn the owner’s objection.
The company specializes in renting electronic products such as smartphones and tablets to consumers, and declined to comment when the restructuring process is underway. A spokesperson for M&G and Fasanara declined to comment.
Without emergency funds, troubled German startups will face defaults. Fasanara Capital said late last year that it could terminate an agreement to provide liquidity if shareholders refund the plan to sell the company to the founder.
Some say founder Michael Cassau has been seeking financing from the Fortress Investment Group to fund possible agreements that may still be considered after court proceedings. A spokesperson for the fortress did not immediately respond to a request for comment.
Fasanara said in a December letter that the investor battle would confront Cassau with the company’s management and Fasanara as control of the startup is worth more than $1 billion in 2022. Grover does not generate enough revenue to take on its debt, and its corporate value covers less than half of outstanding debts.
Higher interest rates and increasingly scarce venture capital funds have led to many board conflicts in European startups this year. A dispute over insurance technology company Wefox Holding AG led to a strike by its interim CEO, backed by its largest investor, Mubadala, which each controlled Getir Perakende Lojistik after a power struggle to deliver services in Turkey’s grocery stores.
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