BrightHouse is poised to reveal a £220m financial restructuring through a debt-for-equity swap.
The deal will leave private-equity firm Vision Capital with an stake of only 3%, Sky News Reported.
Funds linked to Apollo Management, another private-equity player, will own almost half of BrightHouse’s shares.
A deal would end uncertainty about BrightHouse’s future in the wake of controversies such as it being ordered to pay a £15m compensation bill to customers by regulators.
Under the deal Apollo and Alteri Investors – the latter a specialist turnaround fund backed by the former – will own almost half of BrightHouse’s shares.
Other debtholders such as HSBC would sell their holdings.
The deal still requires the approval of creditors and regulators.
BrightHouse has been under pressure for some time after losses resulting from growing regulatory scrutiny rose.
The Financial Conduct Authority (FCA) recently ordered it to repay nearly 250,000 customers for failing to act as a “responsible lender”.
The ability of more than 80,000 customers to repay loans from BrightHouse had not been properly assessed by the retailer.
Under the restructuring plans, the consortium of BrightHouse investors would swap about half of its existing £220m of debt for equity.
The rest of the debt, which matures in May next year, will stay on BrightHouse’s balance sheet.
Alteri, the largest bondholder, has reached an agreement in principle with the other major lenders including Highbridge Capital Management, HSBC and Oceanwood Capital Management, it is understood.
Additionally, it is thought that BrightHouse chairman Henry Staunton will step down after the deal completes.
Headhunter Egon Zehnder International will seek a successor and other new board members.