A group of cross-holders owing both Acosta Inc.’s $1.99 billion term loan B due in 2021 and $800 million senior unsecured notes due in 2022 has organized with Centerview Partners as financial advisor and Davis Polk as legal advisor, according to sources.
The group accounts for roughly 70% of the loan and 70% of the bonds, sources add.
Acosta
reported fiscal third-quarter results on Sept. 14 that revealed a 7.1% decline in revenue adjusted for acquisitions to $440.8 million due to lower sales services revenue and a 13.1% decline in adjusted EBITDA to $64.3 million. The company has been operating under a new CEO since July. Management has said it is working to cut costs, including reducing its real estate footprint, which spans as many as 175 office locations. The company is targeting $13.3 million in cost savings from programs that have been implemented or will be implemented in the next 24 months.
Net leverage stood at 9.6x at July 31, based on LTM adjusted EBITDA of $300.4 million (which excludes the $13.3 million of cost savings) and net debt of $2.88 billion, according to company financials reviewed by Reorg.
On the earnings call on Sept. 17, interim CFO Matt Laurie said in response to a question that the company continues to talk with financial sponsor Carlyle on addressing its capital structure but did not elaborate further. Acosta has a $110 million revolving credit facility due in 2019 and is exploring the use of its receivables as collateral to carry out a refinancing, according to management.
The term loan was recently quoted at 75/77, according to a trading desk. The notes last traded on Oct. 4 at 35.563, according to TRACE.
Centerview and Davis Polk did not immediately respond to requests for comment.