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Private Equity Firms Quietly Return to Debt-Funded Payouts

  • Bite in Europe, Epicor in U.S. pay dividends via new debt
  • Ratings agencies warn about taking on more leverage in crisis
U.K. hotel chain Travelodge has struggled with leverage amid the virus pressure this year, having previously added debt to make payments to owners. 

U.K. hotel chain Travelodge has struggled with leverage amid the virus pressure this year, having previously added debt to make payments to owners. 

Photographer: Jack Taylor/Getty Images 

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Private equity-owned companies are again raising debt to pay their owners dividends, just as warnings sound about saddling businesses with more leverage in the midst of a downturn.

This month Baltic telecommunication firm Bite and U.S.-based Epicor Software Corp. have both turned to the leveraged debt market for deals that will pave the way for so-called dividend recapitalizations, where private equity firms have a portfolio company borrow more in order to return money to their owners.