One of Victoria’s largest disability and youth services providers, the Oncall group, has been facing financial struggles for a number of years. This problem hasn’t come from the cash-flow of operations, which is positive, but rather the cost of servicing and refinancing existing debt.

And so, as a result, Oncall is now undergoing a major financial restructuring.

It’s been reported in the Financial Review that the private credit firm Metrics Credit Partners could take control of the company through a debt-for-equity swap. This means Metrics would take over the debt in return for part of the company. This would mark a significant shift in Oncall’s ownership.

At issue here is a bigger issue, affecting the whole sector. It raises questions over the financial sustainability of private equity-backed disability service providers. This is particularly the case in an environment where fixed government funding and regulatory oversight are key factors.

Metrics obviously sees plusses for it in the transaction. It’s been a lender to Oncall for at least two years when it purchased some of the company’s debt from banks, including Macquarie and HSBC. It’s understood that those lenders recovered as little as 10 cents in the dollar.

At the same time the broader private credit sector, which has seen rapid expansion in recent years, is now facing increased scrutiny from the Australian Securities and Investments Commission (ASIC).

With the disability sector heavily reliant on stable funding and governance, the transition at Oncall will be closely watched to assess its impact on service delivery and workforce stability. The issue the sector faces is similar to the situation for aged care and other service companies - providing services at fixed rates obviously limits the flexibility of business to increase fees.

For those working in the disability sector, this case highlights the risks of private equity ownership in essential services and underscores the importance of financial resilience in ensuring continuity of care for people with disabilities.

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Nic Stuart, editor