Private equity firm The Carlyle Group is poised to take over debt buyer Pioneer Credit, which has been struggling to resolve debt covenant breaches for several months. Pioneer announced that it has entered into a scheme implementation agreement with Robin BidCo Pty Ltd and Robin HoldCo Holdings Ltd, which are both part of The Carlyle Group. The bidder is offering cash of A$1.82 a share. Pioneer plans to pay a fully franked special dividend of 24 cents a share prior to implementation of the scheme. Pioneer traded at a high of $3.17 this year and was trading at $2.46 when it was suspended late in August. On September 2, Pioneer warned it was at risk of breaching a financial covenant under its senior financing facility. The cause of the problem was a material difference in the company's expected net profit for 2018/19 due to the classification and measurement of its financial assets at amortised cost. The application of amortised cost to more than 900 debt portfolios changed the timing of when earnings are recognised in the accounts. The change explained the fall in earnings from $17.6 million in 2017/18 to $4.3 million for the year to June. The fall in earnings triggered a breach of the company's financial covenants under its senior financing facility. A working capital deficit was caused by the classification of $169.4 million of borrowings as current liabilities. When the company released its 2018/19 financial report late in September, it reported that events of default had occurred and that it had entered into a standstill agreement with its senior financiers, Bankwest and Westpac, giving the company some breathing space before lenders take action. The financial report included a statement that there are reasonable grounds to believe that the company would be able to achieve a restructuring of its debt, a recapitalisation through an equity raising or realisation of value by way of sale of some of its assets. It announced that it had appointed Azure Capital to assess proposals received for the realisation of the value of its assets, including change of control proposals, and for the provision of alternative funding if required. The company said there had been no diminution in total expected liquidations of its debt portfolios, which captures the expected timing of forecast cash flows. Debt portfolio liquidations rose 17 per cent to $118.5 million in 2018/19. Pioneer chair Michael Smith said in a statement accompanying the financial report: "Despite a disappointing NPAT outcome due to the application of amortised cost to our portfolio, we are pleased with the growth metrics not impacted by the accounting change, in particular the record EBITDA and cash liquidations. "The company's business fundamentals remain strong. It continues to fund its PDP forward flow commitments in a sustainable manner from cash flow." That standstill agreement with the banks expired on December 2. According to the company's most recent statement, the senior financiers are