Pioneer Credit takeover in doubt

Pioneer Credit has accused its major lender and takeover bidder, US private equity group Carlyle, of trying to either push down its $120 million takeover offer to a very low price or withdraw from the deal altogether.

This was after Carlyle claimed that Pioneer had breached the terms of its loan agreement, saying this constituted a default event.

The outstanding balance on the loan facility is $141.6 million, with Carlyle claiming it has the right to demand early repayment, although it has not yet taken that step.

Carlyle has also claimed Pioneer has breached the terms of their Scheme Implementation Agreement.

Pioneer’s shares closed down today 54.7 per cent on the news to trade at 28 cents.

Among the breaches, Carlyle alleged the “occurrence of a material adverse effect in respect of (Pioneer) as a result of the impact of COVID-19 on the business” and the “non-compliant disclosure of information to Carlyle prior to its entry into the facility agreement”.

Carlyle has given Pioneer five business days from the notice, received yesterday, to remedy the alleged defaults.

However, Pioneer has rebutted the claims outlined by Carlyle, saying none of the matters comprise a default under the facility agreement.

“It seems clear to the board that Carlyle are intent on exercising maximum pressure on the company, including using the potential impacts of COVID-19, to move from their original commitment under the Scheme Implementation Agreement and either withdraw from the transaction or attempt to gain control of Pioneer for a very low price,” Pioneer said.

“Pioneer believes that is has engaged with Carlyle in good faith continuously throughout the period since the Scheme Implementation Agreement was signed, providing extensive information, analysis and data and has responded to all enquiries with vigour and detail."

Pioneer said it was disappointed with Carlyle’s actions.

The company has threatened legal action against the US firm if it does not withdraw its default notice by Friday.

Pioneer will seek “declaratory relief and any other necessary ancillary orders, including but not limited to orders for specific performance of the facility agreement, and for injunctive relief”.