£1bn of private-equity deals put back as debt market freezes over

Nearly £1bn of mid-market private business sales are known to have been postponed so far in October, as the credit crunch wrecks private equity's ability to finance bids.

Auctions that will be delayed until at least January include the £450m sale of Extra, the UK's fourth-biggest motorway chain; the £300m contest for Deb, the maker of heavy-duty handwash Swarfega; Close Brothers Growth Capital's disposal of environmental consultancy Entec, valued at around £100m, and the £90m race for National Accident Helpline, the "no win, no fee" legal services firm.

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Private equity sources said banks were unable to offer debt packages at terms that would encourage interested parties to make strong bids. Other selloffs are thought to be in trouble, with bidders for a £500m portfolio of motoring divisions owned by insurer Aviva worried that the auction could be pulled by the end of the month.

Robert Wade, chairman at Swayfields, the property developer that owns Extra, said: "We have postponed the sale in light of market conditions. We'll look again in the new year. The debt market now is basically frozen."

A source close to the National Accident deal said an information memorandum for the business had not been distributed. Owner LDC, the private equity arm of Lloyds TSB, found banks were offering poor lending terms.

Advisers were working up a "staple" – trying to secure debt terms from banks ahead of a bidding war, so interested parties do not have to go through the time-consuming process of finding backers themselves. A market source said that he expected a sale would be looked at again in January.

The failure to arrange a strong staple is thought to have caused the delay in the auction of Deb, owned by Barclays Private Equity. Valued at £300m, some potential bidders believed the firm was worth closer to £200m.

The Entec sale has been "suspended", according to a source, although there are still some discussions with potential bidders. The source added: "This is an asset that private equity knows well and that the world and his wife have been interested in. Now is just not the right time to sell."

However, Royal Bank of Scotland is in talks with parties interested in buying RBS Mentor Services, an employment law adviser, for up to £150m. This is another auction thought to be under threat, though no definite decision has yet been made.

An industry source said no private equity-led deal was likely to be completed in 2008. He added: "How do you get deals past banking finance committees at a time like this?"