Private equity firm Apax has started the process to sell all or part of Hit Entertainment.
It has called in the banks ahead of an expected trade sale of either Thomas & Friends, or the whole business early next year. Apax was forced to rework its Hit borrowings after the business suffered a slump in demand during the downturn.
It hopes the sale of Thomas could help pay off the remaining £300m debt weighing the business down.
Earlier this year during Easter, Hit reached a new agreement with its creditors to amend and extend its credit facilities. This followed an agreement with lenders to waive a scheduled covenant test on its $579 million debt.