BlackRock-backed HPS and Oaktree take control of Hollywood production supplier MBS

Private credit firms HPS Investment Partners and Oaktree Capital Management have assumed control of MBS Group, the production equipment supplier, following the company's default on its debt, according to the Financial Times. The two lenders, alongside other creditors, recently converted hundreds of millions of dollars of MBS debt into equity and took ownership last week.

The financial restructuring also involves an additional $40 million in funding from creditors to aid the company's operations and facilitate a resurgence in growth. HPS, a subsidiary of BlackRock, and Oaktree are among the creditor entities now leading the business.

MBS supplies lighting equipment and other production infrastructure to over 600 sound stages globally, including renowned studios such as New York's Silvercup Studios and Los Angeles' Television City. The transaction concludes the ownership of Hackman Capital Partners and Affinius Capital, who had acquired MBS from Carlyle for $650 million in 2019. Hackman Capital attempted to merge MBS with the sound stages it directly owned.

The entertainment industry has faced significant financial strain due to reduced production spending since the streaming boom began to wind down. This slowdown has impacted various businesses supporting film and television production, including MBS and Hackman Capital. The two firms had been collaborating with restructuring adviser AlixPartners to implement cost reductions and restructure debt.

Talks about a potential recapitalization began last year as MBS grappled with its debt obligations and other financial pressures stemming from its former owner's challenges.

Additionally, MBS faced complications related to payments for services provided across Hackman Capital's wider property portfolio. Hackman-owned venues constitute approximately 14% of the sound stages serviced by MBS.