Mon 10/12/2020 19:16 PM
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Bioplan USA, a New York City-based provider of marketing, packaging and interactive sampling products to the fragrance, beauty, cosmetic and personal care industries, faces a 2021 maturity wall that it is challenged to address via a traditional refinancing amid quotes in the high 50s context on its first lien term loan and a lack of visibility on the resumption of demand for its clients’ products as consumers continue to work remotely during the Covid-19 pandemic, according to sources. Continue reading for the Americas Middle Market by Reorg team's initial coverage of Arcade Beauty, and request a trial to access our coverage of hundreds of other mid-market names.

An ad hoc group of lenders to the $246.9 million first lien term loan due September 2021 that includes cross-holders of the company’s $102.5 million second lien term loan due September 2022 has organized with Davis Polk as legal advisor, the sources said. The group has been consulting with PJ Solomon in the event it needs a financial advisor to assist in refinancing negotiations, which the company has suggested to lenders it plans to begin soon, the sources said.

Bioplan operates within cosmetics, fragrance and digital segments across the United States, Europe, Asia and Latin America, serving large CPG manufacturers. As of the three months ended March 31, the company derived 49% of its revenue from Europe, 42% from North America, 8% from Latin America and 1% from Asia, according to a June 3 Moody’s report.

Performance amid the Covid-19 pandemic has weakened as the company distributes most of its sampling products to retailers and beauty salons in North America and Europe that have been forced to close during lockdowns and because it does not have a meaningful digital footprint, Moody’s noted in the June 2 report. The disruption in foot traffic, in addition to reduced demand for beauty and fragrance products in the middle of work-from-home mandates, has resulted in a pullback in client marketing spending and product sampling volume, affecting the company’s ability to generate free cash flow, Moody’s noted.

Quotes on the first lien term loan are down from 83 at the midpoint on March 16, the approximate point at which retail closures were mandated in North America, according to a trading desk. The pre-Covid-19 stressed levels reflect the growth of e-commerce and increased competition, sources added. The second lien term loan is not actively quoted, according to a trading desk.

The capital structure includes a $20 million unsecured revolver due January 2021 that was fully drawn as of March 31, according to a June 2 Moody’s report.

An illustrative capital structure is shown below:
Arcade Beauty Bioplan USA capital structure from Americas Middle Market by Reorg

Bioplan has a €49 million accounts receivable facility due March 2022, under which $38.9 million-equivalent was outstanding as of March 31, according to the June 2 Moody’s report. The A/R facility could be used to refinance the revolver absent consent from revolving lenders to extend its maturity, sources noted. However, a drop in the company’s receivables balance amid revenue declines could constrain availability under the facility, Standard & Poor’s noted in a July 10 report.

Bioplan USA and peer Arcade Marketing merged in September 2014. The combined company is known as Arcade Beauty and is wholly owned by Oaktree Capital but operates as separate entities.

Bioplan, Oaktree and Davis Polk did not immediately respond to a request for comment. PJ Solomon declined to comment.

--Millie Dent
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