Auditor BDO Cuts Jobs With Focus on Managing Apollo Debt

(Bloomberg) -- Auditing firm BDO USA has slashed costs as it managed an expensive debt agreement with Apollo Global Management Inc.

BDO has laid off dozens of employees in recent months and halted non-essential travel earlier this year, according to people familiar with the situation, who asked not to be identified discussing private matters. Cuts have affected business lines including audit, tax and advisory, one of the people said. 

The belt-tightening comes as one of BDO’s clients, the now-bankrupt First Brands Group, contends with angry creditors over its use of off-balance sheet financing. The auto-parts supplier was among BDO’s largest clients, some of the people said. In a statement, BDO said it doesn’t comment on clients.

Apollo is the biggest lender to BDO through a $1.3 billion loan facility agreed to in August 2023, according to filings. The debt is currently paying interest of around 9%, filings show. The deal was refinanced as of June 30, shaving 100 basis points off of the interest rate, filings show.

A representative for BDO said the company is on solid financial footing and that it regularly reviews its operations to ensure maximum efficiency.

A representative for Apollo declined to comment. 

BDO used the debt from Apollo to fund its Employee Stock Ownership Plan in 2023, according to filings. A participant in January filed a proposed class action, alleging workers were overcharged to join the plan.

In March, BDO issued First Brands an unqualified opinion, the highest seal of approval an auditor can award, one of the people said. However, just a few months later, First Brands asked Deloitte to carry out a quality of earnings report on the firm after its lenders increased scrutiny on its use of trade financing.

First Brands’ sudden collapse left investors nursing huge losses on upward of $10 billion of debt. For its part, Apollo began betting against the auto parts supplier’s debt last year, scoring a win when the price of the company’s loans plunged last month. Apollo recently closed the position, Bloomberg News has reported.

--With assistance from Isis Almeida.

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