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Vialto, the global tax and immigration consultancy that used to be part of PwC, is planning to restructure $1.5bn of debt loaded on to the business in a private equity buyout just two years ago, after running into financial difficulty following its separation from the Big Four firm.
The company was in talks with creditors, including Pimco and Blackstone, to reorganise its capital structure after cost overruns triggered a run of rating agency downgrades, the company told the Financial Times.
The sale of the “global mobility” business was one of several strategic moves PwC has made in recent years to raise capital to invest in faster-growing areas of its consulting business. The private equity firm Clayton, Dubilier & Rice and the unit’s partners acquired the business and renamed it Vialto in a 2022 deal that valued it at $2.2bn.
The business provides personal tax, immigration, travel and payroll services to multinational organisations and their employees. Its partners had hoped it would be able to expand more quickly as a standalone business outside the Big Four firm.
But it has struggled to meet its financial targets, according to rating agencies. “The functional separation [from PwC] has been highly complex and costly, leading to much weaker financial performance than initially expected,” Fitch wrote in a note downgrading Vialto debt last year.
Moody’s said in June that it had “growing concerns relating to the continued deterioration in the company’s liquidity profile amidst the current protracted high interest rate environment”.
A $952mn loan maturing in 2029 is trading at about 80 cents on the dollar. Vialto also has a $400mn loan maturing in 2030 and a $200mn credit facility that Moody’s said had been three-quarters drawn in June.
“Clearly, they’ve had some operational issues,” said one lender. But the company’s biggest problems were caused by the structure of the spinout from PwC, as opposed to the business operating in a troubled sector, the person added.
A group of creditors, including the asset managers Pimco and Blackstone, has hired law firm Davis Polk and the investment bank Guggenheim Partners to advise them, according to people familiar with the move. Vialto has hired AlixPartners to advise on operational improvements, according to one person familiar with the matter.
“We have been working with operational advisers on initiatives to address our working capital and costs to better position Vialto for the future,” the company said in a statement. “As a next step, we are engaging in discussions with our financial stakeholders focused on creating a sustainable capital structure to support Vialto’s long-term growth and continued commitment to delivering mobility, tax and immigration solutions to the world’s leading companies.”
The creditors and their advisers declined to comment.
Peter Clarke, the PwC partner who led the mobility business when it was part of the Big Four firm and became its first independent chief executive, announced his departure in April. He was replaced by an executive from outside the company, Neil Masterson, who had previously run the internet service provider OneWeb and been co-chief operating officer of Thomson Reuters.
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