TPG and Apax Partners are being sued by the liquidators of their former portfolio company, Hellas Telecommunications, for what they call “one of the very worst abuses of the private equity industry”.
Hellas’ liquidators, who filed the lawsuit in New York last week, alleged that TPG and Apax used Hellas to “carry out the highly leveraged acquisition of a pair of Greek telecommunications businesses, before causing Hellas to borrow well in excess of $1 billion in additional funds that were then immediately siphoned out of the company without consideration.”
The complaint claims that TPG and Apax “disposed” of Hellas and its subsidiaries within two months and pocketed a windfall, “leaving Hellas insolvent and staggering toward bankruptcy”.
“The defendants systematically pillaged Hellas’s assets by piling on debt, extracting exorbitant management and consulting fees, and making massive and improper distributions to themselves,” said Andrew Hosking, one of Hellas's UK liquidators, in a statement.
“This complaint is merely a rehash of the ill-founded claims filed in prior cases going back to 2011. As the plaintiffs presumably know, Apax and TPG sold Hellas to a third party for €3.4 billion at virtually the same time the plaintiffs claim that Hellas was insolvent. Moreover, it was not until approximately three years later that the Hellas notes went into default. For these reasons and others, we are confident that plaintiffs’ claims will not succeed,” said an Apax spokesperson in an emailed statement.
A TPG spokesperson declined to comment.
TPG and Apax acquired Hellas for €1.1 billion in 2005, according to the court documents.
The liquidators have made claims of actual and constructive fraudulent conveyance and unjust enrichment. They are suing for the return of all of TPG and Apax's profits from the transaction – €973 million plus interest, consulting fees and damages.