An American investment giant which has bought billions of pounds of loans from UK taxpayers is among a pack of suitors circling Addison Lee, the minicab operator.
Cab4Now.com has learnt that Cerberus Capital Management has been weighing a bid for Addison Lee in recent weeks as the company’s current owner attempts to secure a rapid sale.
City sources said on Monday that Cerberus had submitted an offer for London’s second-largest minicab company ahead of a recent deadline, although it was unclear how formal, or at what level, any proposal had been.
Cerberus did not respond to more than half a dozen requests for a response.
The auction of Addison Lee, which its current owner, Carlyle, wants to conclude before the end of the year, comes as Uber Technologies faces a fresh legal battle to renew its London operating licence.
Several parties are said to have tabled bids for Addison Lee, but these are expected to value the company at well below its £230m of outstanding borrowings.
That is likely to mean that the company will undergo a debt-for-equity swap or a pre-pack administration as part of a prospective change of control, according to insiders.
They added that an insolvency event has become less likely in the last few weeks.
It is unclear whether Cerberus has any existing financial exposure to Addison Lee, which directly employs 1,000 people and has about 5,000 drivers on its books.
Cerberus, which manages tens of billions of dollars in assets, is best-known in Britain for having bought a £13bn portfolio of consumer loans from an entity owned by UK taxpayers in 2015.
It has recently been linked with a takeover of Europcar Mobility Group, the car rental giant.
A syndicate of more than a dozen banks led by the Dutch financial giant ING had drafted in advisers from Alvarez & Marsal (A&M) to consider their options during the minicab operator’s auction.
Addison Lee, which has been owned by Carlyle since 2013, is due to repay about £200m to lenders next spring.
The accountancy firm Deloitte is working alongside Rothschild on the sale process.
Carlyle kicked off the auction six months ago, attracting tentative scrutiny from financial sponsors and companies including Uber Technologies and Ola, the Indian ride-hailing app.
While valuations as high as £800m were suggested earlier in the year, fierce competition from ride-hailing apps including Uber and the patchy performance of Addison Lee’s US business have contributed to substantial losses at the British company.
Bankers are said to have raised the idea of a break-up of its operations in an effort to smooth the path towards a sale.
Its UK business is understood to generate cash but the group’s financial performance has been hampered by its results elsewhere.
In its results for the year to August 2018, Addison Lee posted a 13% increase in revenues but recorded pre-tax losses of almost £39m, up from £20.8m a year earlier.
It said it had grown revenues by 47% over a three-year period “in an incredibly competitive market”.
Addison Lee, which was established in 1975 by John Griffin, says it transports more than 10 million people in London alone each year, giving it a market share of roughly 10%.
Carlyle declined to comment on the progress of the Addison Lee auction.