Clover Technologies to Explore Strategic Options as Contracts Shrink

(Bloomberg) -- The value of 4L Technologies Inc.’s debt plunged after the recycler of inkjets and mobile phones disclosed cutbacks by two customers and hired advisers to consider strategic options.

The company, which operates under the name Clover Technologies Inc., brought in law firm Kirkland & Ellis LLP and investment bank Jefferies LLC to evaluate balance sheet alternatives and strategic options, according to people with knowledge of the matter. They cited a July 9 preliminary earnings report that cut guidance and invited lenders to organize and hire their own advisers. The people asked not to be identified discussing the confidential report.

Clover is the world’s largest collector and recycler of imaging supplies and also handles mobile electronic devices, according to its website. The company says it collects, re-manufactures and distributes millions of laser and inkjet printer cartridges and wireless devices through manufacturing facilities in the U.S., Mexico, Europe and Asia.

PE Owner

Golden Gate Private Equity Inc. has been the majority owner of the Hoffman Estates, Illinois-based company since 2010. A representative for Golden Gate declined to comment; representatives for Clover, Kirkland and Jefferies didn’t have an immediate comment.

Price quotes on the first-lien loan due in 2020 fell to around 75 cents on the dollar Wednesday, from 97 before the earnings update, according to people familiar with the matter. The term loan, which has around $693 million outstanding, was issued to fund a $178 million dividend to shareholders in 2014, and to refinance its existing debt and pay fees and expenses related to the transaction, according to a ratings report at the time.

The company told debt holders it expects reduced business from two customers, one from wireless and one from imaging, and that pricing for imaging has become more competitive. 4L Technologies also cut the range of its annual earnings forecast to between $87 million and $96 million, from $135 million to $145 million back in March, the people said.

Even with those reductions, the company said it has $136 million of cash on hand, which is enough to support the business during the transition, according to the people. It proposed a meeting with creditors during the week of July 22. Pro forma revenue excluding the telecom business was $820 million for the twelve months ended Dec. 31, Moody’s Investors Service said in a March report.

--With assistance from Lisa Lee and Shannon D. Harrington.

To contact the reporter on this story: Katherine Doherty in New York at kdoherty23@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Nicole Bullock

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