By Emily Glazer
Altegrity, a defense contractor that has been hurt by government
budget cuts, has enlisted restructuring advisers to help it cope
with an unwieldy debt burden of roughly $1.8 billion, according to
people familiar with the matter.
Altegrity, the holding company for US Investigations Services
LLC, is working with restructuring bankers at Evercore Partners
Inc., these people said. Debevoise & Plimpton LLP, the firm's
longtime outside corporate counsel, is working alongside Evercore
on the potential restructuring, some of these people said.
The restructuring advisers were tapped to address coming debt
maturities and assess other options to ease the company's debt
burden, while also working out operational problems, some of these
people said. Bankruptcy isn't imminent for the closely-held
company, these people added.
USIS is a major private player carrying out background
investigations for the federal government as part of its granting
of security clearances to millions of people given access to
classified information. The firm screened former National Security
Agency contractor Edward Snowden, who leaked information on
top-secret U.S. surveillance programs.
Trade publication Debtwire earlier reported Evercore had been
hired by the company.
Altegrity is one of a number of defense businesses that have
suffered from sequestration, automatic budget cuts mandated by
Congress to help rein in the deficit. Its debt load of close to $2
billion makes Altegrity one of the larger corporate financial
restructuring cases to develop in the past year.
Another defense contractor, IAP Worldwide Services, which is
owned by investment firm Cerberus Capital Management LP, has held
restructuring talks with creditors and expects a resolution in the
near future, people familiar with the matter say.
Alion Science and Technology Corp. reached an agreement with a
group of creditors late last year to push out the maturity of its
roughly $350 million of bonds coming due in 2015, according to a
securities filing.
Altegrity is owned by private-equity firm Providence Equity
Partners LLC. It oversees the work of USIS; Kroll Advisory
Solutions, an investigative and security firm; Kroll Ontrack, a
technology firm; and HireRight, an employment-screening
business.
USIS is facing federal investigations and lawsuits over its
handling of security background checks for the U.S. government. In
November, The Wall Street Journal reported that Providence Equity
planned to reorganize the company and its three subsidiaries, and
that top executives planned to leave the company after the
transition. It is unclear when that reorganization will be fully
implemented.
In November, a federal grand jury in Washington, D.C., was
examining allegations that USIS rushed background investigations
for the federal government through its review process without
adequate review, according to people familiar with the matter. The
status of that examination is unclear.
Federal officials at the time had concluded that USIS carried
out a flawed 2011 background check of Mr. Snowden, the former
contractor who leaked to the press classified documents exposing
America's surveillance programs.
The Justice Department had said in the fall it was intervening
in a separate whistleblower lawsuit filed in 2011 by a former USIS
manager who accused the company of methodically cutting corners in
an attempt to boost its profit. By intervening in the lawsuit, the
Justice Department is effectively siding with the whistleblower's
allegations.
Providence bought Altegrity from investment firms Carlyle Group
LP and Welsh, Carson, Anderson & Stowe for $1.5 billion in
2007. It increased its investigative and security consulting
businesses after buying Kroll Inc. in 2010 for $1.1 billion from
Marsh & McLennan Cos. Inc.
Dion Nissenbaum contributed to this article.
Write to Emily Glazer at emily.glazer@wsj.com
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