The company will be run by creditors before exploring another sale process after previous attempts to sell the firm failed.
The company has some 160,000 customers. (Image: Getty)
A major UK broadband provider is set to be taken over by creditors after becoming heavily indebted. Gigaclear, which has more than 160,000 customers, will be run by creditors before exploring another sale process after previous attempts to sell the company failed, two people familiar with the matter told the Financial Times.
Equitix said a £ 50 million investment it made into Gigaclear in 2023 had enabled the company to unlock £1 billion in senior debt to aid the expansion of its network. However, the investment firm was left disappointed that “the financial performance of the investment did not meet the targets that Gigaclear set itself”, the FT reports.
The debt remains at around £1billion after an expected equity injection from Equitix reportedly failed to materialise that year, seemingly contributing to the company’s financial pressures.
Other shareholders include Railpen and Infracapital. Creditors running the company are expected to the National Wealth Fund (NWF), which is backed by the taxpayer, as well businesses including banks NatWest and Lloyds.
Options about how to proceed are being considered by creditors and advisors.
Among them is writing down the debt, though one of the sources the FT spoke to said Gigaclear’s 160,000 customers won’t be affected regardless of which measures are taken to stabilise the business.
Gigaclear declined to comment when approached by the newspaper.
But while the sector became more competitive, growth hasn’t been as strong as expected, and distuptors have struggled with the debt burdens they took on.
The subsector had a net industry debt of over £9bn at the end of last year, according to Enders Analysis.
The developments with Gigaclear come after competitor, G Network went into adminstration in January after being acquired by FitzWalter Capital.
The broadband provider has racked up around £300million in debt. Just days after acquiring the company, which counts some 25,000 customers, distressed debt specialist FitzWalter Capital applied to appoint administrators at G Network.
