Financial Restructuring


Expert reporting and in-depth analysis on firms facing the need for financial restructuring with a focus on the complexities of each case. Our coverage dives deep into different types of restructurings including corporate restructuring, mergers and consolidations, recapitalizations and post-reorganization insight.

FTLive and Reorg: Global Alternative Credit Summit (May 4-5, 2022) — Hong Kong program

Private credit is booming with estimates suggesting the market is now worth more than US$1 trillion. Having moved from the margins to the mainstream, this previously niche asset class is proving a real disruptor in debt capital markets, as investors seek out steady and healthy returns, and borrowers opt for new non-bank sources of finance. Hear from market leading experts on distressed restructuring, bankruptcy analysis, and the leveraged loan market in 2022 and beyond.  During the summit, we will discuss debt restructuring, leveraged finance, financial restructuring and many other topics. 

GLOBAL ALTERNATIVE CREDIT SUMMIT
4 – 5 May 2022
Unlocking Opportunities in Private Debt as the Credit Cycle Turns
In-Person & Digital l Glaziers Hall, London and Harvard Club, New York | #FTAltCredit

The potential for this market is enormous, but there are risks. For LPs, non-bank credit offers diversification uncorrelated with traditional investments; for borrowers, it promises quicker decisions on loans, better tenors and tailored covenants. Yet, despite ample capital, caution remains a watchword as the global credit cycle turns and the pandemic continues to influence the prospects for business and finance. Moreover, with growing calls for greater transparency and tighter regulation in private credit, is now the right time to join this market? Do the benefits outweigh the risks of this dynamic new asset class?

How does this shadow banking market compare to other private asset classes in terms of returns and ease of access? To what extent has it matured to meet the risk and return profile of an increasingly sophisticated pool of global investors? Can current rates of return be sustained in developed markets, against a fast changing and uncertain macro-economic and geo-political background? To what extent will Asia follow a similar growth path? As demand for direct lending, distressed debt, structured credit and leverage finance increases, where will new avenues for growth emerge? How concerned should investors be about warnings around systemic risks, market opacity, standards and illiquidity issues? Is it time to step up the regulation of private credit?

Hong Kong Program: May 5

Welcome remarks from the FT and Reorg

  • Joshua Oliver, Asset Management Reporter, Financial Times
  • Jenn Jutakeo, Head of Credit Research, Reorg

Leaders’ Panel: How should investors balance opportunity and risk Asia’s private credit markets?

Demand from global investors and local borrowers is pushing private debt to new heights across Asia. As the markets in the US and Europe reach maturity, Asia is seen as a new avenue with massive potential for further growth. Where are the key pockets of opportunity for private debt investors as the region recovers from the impact of Covid-19? What are the most effective investment opportunities in this market, from direct lending to mezzanine and distressed debt? How can LPs navigate this complex market with its multiple regulatory frameworks and diverse political regimes? To what extent is the potential for local currency swings an issue that indirectly impacts on private investments?

  • Vaibhav Chadha, Managing Director, Distressed Loans, Cantor Fitzgerald
  • Kanchan Jain, Managing Director & Head of Credit, Baring Private Equity Asia
  • Leslie Lim, Investment Director, Tsao Family Office
  • Roderick Sutton, Special Advisor, FTI Consulting

Fireside Chat: Has private debt come of age in Asia?

  • Andrew Ferguson, Chief Executive Officer, Asia Pacific Loan Market Association (APLMA)
  • Shasha Dai, Managing Editor, Reorg 

Sector Focus Panel: Asia real-estate outlook for private debt investors

Long characterised by large-scale, stable returns, downside protection, and measurable risk, real estate has been considered one of the key opportunities for private debt investors focused on Asia. But have recent events in China’s real estate market altered that picture? Have events in China impacted other regional real estate markets? How is the overall market evolving and how do yields compare with the other debt investment vehicles in the sector? Where are the regional hot spots for value, and has the pandemic affected the risk outlook for real estate? Which loan structures and strategies, from direct lending to investing via funds, are proving most effective in the current market? To what extent does private real estate debt provide an access route to distressed opportunities?

  • Ron Thompson, Managing Director, Asia Restructuring Leader, Alvarez & Marsal
  • Robert Petty, Co-CEO and Co-CIO, Fiera Capital (Asia)
  • Stephen Aldred, Managing Editor, Asia, Reorg
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Chapter 11 Plans’ Analysis Using Credit Cloud

Reorg experts recently conducted an analysis of chapter 11 filings. Using Reorg’s new restructuring dataset, included in Credit Cloud, the analysis reveals that since 2020, five debtors have emerged or will emerge from bankruptcy with more funded debt than they had on their petition dates. Three of these companies have securities trading at stressed levels, with over 10% yields. Mallinckrodt second lien notes are indicated with a 12% yield and Buckingham Senior Living’s 2021B notes are indicated 42.3/43. Reorg has not been able to secure pricing information for the other two companies.

Mall owner Pennsylvania REIT and senior living operator Buckingham obtained concessions from lenders upon exit, including extended maturities, in an effort to carry the companies through the downcycle.

Read the full article here.

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Reorg on the Record: Russia sanctions will not free parties from contractual obligations… (04/20/22)

Written by Shan Qureshi, Head of Legal Restructuring Innovation and Initiatives || The sanctions imposed on Russian individuals and entities by the U.K., EU and the U.S. over the previous months are the most far reaching seen in modern times.

In a recent webinar Reorg hosted with lawyers from Pallas Partners LLP on the impact of sanctions on the loan agreements, we highlighted that sanctions do not act as a route around parties’ agreed contractual arrangements. Lenders who find their arrangements are caught by the sanctions will be forced to act quickly to avoid being fined, while some borrowers may be prevented from making payments easily. Additionally, wrongful termination of contracts could have costly consequences.

Elsewhere, we have seen some judicial criticism of challenging creditors in the U.K. Courts. Creditors were accused of “shouting from the sidelines” in Smile Telecoms’ recent restructuring plan, rather than engaging in a proper challenge. We expect the comments to dissuade creditors with weak grounds of challenge from obstructing future plans.

Our European teams are delivering the most in-depth data, analysis and reporting on thousands of credits that are either stressed, distressed, performing, going through restructuring or post-reorg. Below is a glimpse into our editorial offering:

SMCP
GLAS, as trustee to European TopSoho’s, or ETS’s, defaulted €250 million convertible bond, has brought a claim of fraudulent transfer against the company, seeking to trace and recover 12 million unpledged shares in French fashion retailer SMCP. The shares were last known to be in a JPMorgan account in Singapore in December, transferred via the British Virgin Islands. The U.K claim is one front in a dispute that has been litigated in France, Luxembourg and Singapore » Continue Reading

Smile Telecoms
Lord Justice Snowden sanctioned Smile Telecoms’ Part 26A Restructuring in early April. Smile’s Part 26A Plan is novel for two main reasons: i) The Plan was the first to use section 901C(4) of the Companies Act, 2006, which allowed Smile to exclude it “out-of-the-money” creditor and member classes who did not have a genuine economic interest in the company from voting on the Plan; and ii) The Plan successfully altered the capital structure and constitution of a foreign company. Reorg hosted lawyers Damien Gomez and Rebecca Jarvis from Linklaters in a two-part podcast discussing the name. » Listen here

Lukoil
Lukoil faces several upcoming coupon payments in April, followed by the maturity of its $500 million senior unsecured notes in June, which are currently priced at about 71. Reorg’s analysis notes that the Russian energy giant has ample cash on the balance sheet to address these maturities – the key problem for investors is whether the company will be able to make the payment because of restrictions imposed by the Russian government in response to Western sanctions following Russia’s invasion of Ukraine. » Continue Reading

Corestate
Should German real estate manager Corestate choose to use proceeds from an asset sale to solely redeem its 2022 bonds while the 2023 bonds remain outstanding, this may be restricted by the asset sale covenant of the 2023 bonds. Reorg looks at the asset sales covenant and its implications under the 2022 and 2023 bonds’ indentures. We also consider whether redeeming the 2022 bonds with proceeds from the cash conversion plan without finding a solution for the 2023 bonds could have implications for its directors under the German insolvency regime. » Continue Reading

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Reorg on the Record: Puerto Rico exited its historic Title III restructuring… (04/13/22)

Written by Seth Brumby, Deputy Managing Editor, Americas Municipals by Reorg || After almost five years, the commonwealth of Puerto Rico exited its historic Title III restructuring in March, coincident with one of the worst municipal bond market performances in recent memory. As almost $16.1 billion in restructured general obligation and contingent value instruments broke for trading on March 15, the municipal market more broadly was on track for a loss of 6.2% in the first quarter of 2022. Continued outflows from the municipal bond market were the primary culprit in the underperformance, driven largely by the Federal Reserve’s campaign to tame inflation by aggressively raising rates. Pockets of performing opportunities still exist, as does a growing pipeline of distress, particularly in senior life plan communities.

Our Americas teams are working tirelessly to bring subscribers the most in-depth data, analysis and reporting on more than 3,000 performing and distressed credits. Below is a glimpse into our offering:

Mallincrodt
The company’s latest unsecured bond prices, at around 50, according to Solve Advisors, imply that its reorganized equity market valuation upon emergence from chapter 11 would be roughly half of the company’s estimated plan valuation. The reorganized company, which expects to emerge from chapter 11 later this month, would have a debt load, when including the aggregate amount of future settlement payments, approximately $100 million higher than the funded debt total at petition. » Continue Reading

U.S. Virgin Islands
U.S. District Judge Robert Molloy has dismissed with prejudice the U.S. Virgin Islands Government Employees’ Retirement System’s, or GERS’, suit against the government of the Virgin Islands. In an order on Friday, April 8, the judge granted the parties’ joint motion to terminate the consent judgment related to the government’s statutorily required payroll deductions to GERS in light of the recent enactment of Act 8540. » Continue Reading

CFIUS
The Senate Banking Committee held a hearing to consider the nomination of Paul Rosen to be assistant secretary for investment security at the U.S. Department of the Treasury, a position that oversees the work of CFIUS. In prepared testimony Rosen said, “As technology advances at warp speed and the intentions and capabilities of our adversaries expand, CFIUS, and the talented career public servants who support it, are a critical gatekeeper in protecting the United States from malign foreign investment while continuing to promote an open investment climate.” » Continue Reading

Puerto Rico, PROMESA
The proposed Territorial Relief Under Sustainable Transitions for Puerto Rico Act of 2022, or the TRUST for Puerto Rico Act, filed last week, seeks to expedite the termination of the PROMESA oversight board by changing the requisites for termination, and it also outlines the transfer of oversight board authority back to the commonwealth for any Title III and Title VI cases pending at the conclusion of the oversight board’s mandate. » Continue Reading

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From Reorg Asia’s Managing Editors
In this column, managing editors Stephen Aldred and Shasha Dai take turns writing about trends in high yield, distressed debt, restructuring and bankruptcy in major Asian markets including China, Southeast Asia, India and Australia. For questions or comments, contact Stephen at saldred@reorg.com and Shasha at sdai@reorg.com. Send your people and fund news to asiaeditorial@reorg.com.

High-yield bonds of Chinese real estate developers regained some ground on March 16 and March 17 after a widespread selloff, as vice-premier Liu He, Xi Jinping’s closest economic adviser, announced the government would take measures to boost China’s economy in the first quarter and introduce policies favorable to the market.

The signal was reinforced when state media outlet Xinhua reported talking points from a meeting of the country’s financial stability committee, chaired by Liu, signaling a raft of investor friendly measures and indicating active support for the property sector, including through delay of property tax trials.

Policy support statements swiftly followed from the China Banking and Insurance Regulatory Commission (CBIRC), the People’s Bank of China (PBOC), and the China Securities and Regulatory Commission (CSRC), stressing stability over reform.

High-yield Chinese real estate bonds rallied on Thursday, then stalled on Friday.

Sunac sank as much as 15 points as irrational earlier gains on its bonds in the wake of the policy statements gave way to reality, and the market realized Sunac’s liquidity problems would not magically vanish overnight because of government signals of support.

The company has RMB 24 billion of offshore and onshore public bond maturities in the next 12 months, including two $600 million senior notes maturing in June and August, respectively.

S&P on March 17 downgraded Sunac to ‘B-’ from ‘BB-’, following Fitch’s March 16 downgrade, also to ‘B-’ from ‘BB-’. Both ratings agencies citing refinancing concerns.

The earlier wider market selloff was arguably technical rather than fundamental – even CIFI Holdings and Country Garden Holdings (CoGard) got sucked into the downdraft, as investors sold out to get out, or sold out to raise cash where they could.

Fears that China would support Russia’s invasion of Ukraine, rising commodity prices and rising Covid-19 cases in Mainland China all accentuated existing fears of a chaotic collapse in the country’s property market. In a risk-averse environment, investors read official industrial output numbers for January to February – which far exceeded analyst expectations – with disquiet. Those numbers, combined with the PBOC holding policy rates steady, were read as a signal that regulatory tightening would continue.

CIFI exemplified the irrational volatility. The developer is one of a select few private companies approved to register MTNs with the National Association of Financial Market Institutional Investors, a market usually reserved for state owned enterprises or companies with state backing.

Access to the regulator approved interbank bond markets had created a perception that CIFI had been selected to survive.

But on March 11, the day CIFI was building its book for a RMB 1 billion issue in the interbank market – guided at 3.5% to 4.8% and priced at 4.75% – its bonds went down 7 to 8 points.

By March 16, almost 50% of China property bonds were trading below cash prices of 20, up from 15% just two weeks earlier.

Against that backdrop, it will take more than one intervention to restore long-term confidence and stability.

While last week’s signal of support for the markets was strong, fundamental questions remain, including how statements of support translate into action.

How government support will be offered – and who gets that support – is now a fundamental question in a market where real estate companies confront a new normal where funds are no longer fungible across projects. Consumers, meanwhile, have learned the invaluable lesson that risk exists, and they remain averse to it. Liquidity sources have been shut off.

Liquidity gaps are expected to show more clearly as the annual reporting season for China’s listed property firms ends March 31. Results are expected to come late, and to be ugly.

S&P in its downgrade of Sunac noted the company faces potential debt acceleration by its offshore on-balance-sheet private placement notes holders. Most of the private notes mature within one year. The rating agency revised the China-based property developer’s liquidity to weak from less than adequate, noting that capital markets confidence was weakening rapidly.

Sunac was last week’s reality check. It may be the first to test the reality of China’s market-oriented policies.

–Stephen Aldred, Managing Editor

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Webinar: Russia: The impact of sanctions on loan obligations with Russian parties

Join Reorg and Partners Fiona Huntriss and Matthew Getz from law firm Pallas LLP as we examine the effect of U.K. and EU sanctions on the obligations owed by borrowers to Russian lenders. We will explore the possible unexpected issues that borrowers might face and flag where non – Russian lenders could also be caught out

Thursday, Mar. 24, 11 a.m. GMT

*Please register using your business email address.

Register here.

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Reorg on the Record: Risk-on or risk-off, Reorg continues its mission…

Written by Kent Collier, Founder & CEO || Today marks the 100th edition of Reorg on the Record. We started publishing this weekly digest in the months leading up to the onset of the pandemic. A lot has happened in those two years and candidly, at least to me, it feels like a decade.

The environment today feels quite different from March, April and May of 2020. Cases such as Whiting Petroleum, J.Crew, Avianca and many others dominated Reorg’s docket feed and no one knew what a meme stock was (gentle reminder: Gamestop was going through a proxy battle at that time…).

Reorg is also different – we introduced a number of powerful datasets including our DIP, Restructuring and CLO Databases, we bought Aggredium to help power the research processes of high yield and loan market participants and we extended our editorial coverage to cover more salient topics for our subscribers such as primary coverage, litigation overviews, post-reorg analysis and launched our America’s Municipal product offering.

That said, one thing I am ever grateful for is the resilience and steadfastness of the nearly 300 people that work at Reorg. Between March 1, 2020 and today, Reorg has written approximately 70,000 stories. From breaking news to deep dive covenant analysis on new issuance, these stories help our subscribers stay informed of everything going on in the credit markets. Irrespective of market conditions, risk-on or risk-off, Reorg will continue its mission to empower our subscribers with the information that matters and bring transparency to the global credit markets.

Our global teams are delivering the most in-depth data, analysis and reporting on thousands of credits that are either stressed, distressed, performing, going through restructuring or post-reorg. Below is a glimpse into our editorial offering:

Asia: Sri Lanka Sovereign Debt
The Democratic Socialist Republic of Sri Lanka’s benchmark 7.55% $1.5 billion notes due March 2030, are indicated at 49/50.25, up from 48.75/50.25 on Jan. 14. The 2030 notes, which are widely held and traded in Asia, have been indicated at the level of 52.5/56, since Reorg initiated coverage in May 2020. » Continue Reading

EMEA: European Primary Market
The volume of issuance in the European primary market in January 2022 almost halved compared to January last year and, of those companies who came to market, only a third traded up above their issue price. Market jitters spread across the European primary market in the last two weeks of January, causing issuers who did come to market to price wider than initial price guidance and some to rejig or shelve their issuance plans. » Continue Reading

Americas: Mallinckrodt
A month after the close of a hotly contested trial, Judge John Dorsey confirmed Mallinckrodt’s fourth amended plan in an opinion released on Thursday night, Feb. 3. The decision is a victory for the Mallinckrodt debtors and other plan supporters, who defended the plan against a volley of objections challenging its compliance with the confirmation requirements set out in section 1129 of the Bankruptcy Code. » Continue Reading

Americas: Puerto Rico
In a telephone interview with Reorg, outgoing PROMESA oversight board Executive Director Natalie Jaresko stressed that her remaining two months in the post will “absolutely” include taking the commonwealth plan of adjustment effective, a major milestone in Puerto Rico’s broad restructuring that the oversight board is solidly targeting for March 15. » Continue Reading

EMEA: Orpea Groupe
Investors are monitoring Orpea Groupe after the French care home operator appointed Grant Thornton and Alvarez & Marsal to conduct an internal review following a string of allegations including mistreatment of residents and potential labor law violations, sources told Reorg. Since the allegations, Orpea’s share price has plummeted. » Continue Reading

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Reorg on the Record: Borrowers flock to capital markets to secure funding…

Written by Adelene Lee, Managing Editor, Americas Core Credit, Middle Market & Municipals || As the Fed signaled that it is planning to increase interest rates at its March meeting, borrowers flocked to the capital markets in January to secure funding at rates that remain historically low. Given the direction interest rates are taking, investors are showing a preference for floating-rate instruments including leveraged loans, which saw numerous multi-billion dollar deals to support leveraged buyouts, while turning relatively more cautious on fixed-coupon, longer-duration high yield bonds. Reorg’s Americas team has begun to expand its focus to delve into selective sub-investment grade issuers with high leverage, including Scientific Games, Athenahealth, McAfee.

While Apex Tool Group found redemption in the syndicated loan market after failing to merge with Wanxiang Group Corp. late last year, other companies that either took on expensive debt or sought long-term waivers to escape fixing their balance sheets may face the inevitable in a higher interest rate environment if they fail to return to profitability, as participants in our outlook story for 2022 concluded.

A preview of our in-depth coverage of these names, and many more, is available below.

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Our Americas teams are working tirelessly to bring subscribers the most in-depth data, analysis and reporting on more than 1,000 performing and distressed credits. Below is a glimpse into our offering:

Purdue Pharma
The U.S. Court of Appeals for the Second Circuit has accepted the appeal of U.S. District Judge Colleen McMahon’s Dec. 16, 2021, decision, which vacated Purdue Pharma’s confirmation order and invalidated third-party releases of the Sackler family. In an order last Thursday, Jan. 27, the circuit court granted the petitions for permission to appeal filed by the debtors and other supporters of Purdue’s chapter 11 plan. » Continue Reading

Municipal Debt Industry Update
With the municipal market undergoing its second straight week of outflows, breaking a 45-week positive flow streak, cash pulled to the sidelines by spooked investors slowed the high-yield pipeline. The outflows are not expected to be a permanent pattern at this time and largely reflect inflation and rate hike concerns of investors, according to market participants. » Continue Reading

Ascena Retail
At a status conference in the Ascena Retail debtors’ cases, Judge Frank Santoro and the parties discussed the debtors’ motion (previewed at last week’s conference and filed Wednesday evening, Jan. 26) seeking an order modifying and reconfirming the debtors’ plan of liquidation. The proposed modifications would strike the third-party releases severed by the Virginia district court earlier this month and revise the exculpation provision in accordance with the district court’s opinion. » Continue Reading

Puerto Rico
After certifying an updated fiscal plan for the commonwealth during its 32nd public meeting today, most PROMESA oversight board members and Executive Director Natalie Jaresko said additional fiscal management actions are needed at the central government level before the oversight board can end its mandate while ensuring the Puerto Rico government does not backslide into a second bankruptcy. » Continue Reading

Athenahealth
The company, which provides network-enabled services for healthcare and point-of-care mobile apps, is issuing $2.5 billion of unsecured notes due 2030 in connection with the company’s acquisition by Bain Capital and Hellman & Friedman. Proceeds of the Notes, together with $5.75 billion of new term loan borrowings, $2.36 billion of preferred equity proceeds and a $6.16 billion sponsor investment, will be used to pay the purchase price for the Acquisition and to repay about $4.56 billion under an existing credit facility. » Continue Reading

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Reorg on the Record: 2022 starts with a flurry of high-yield bonds and leveraged loan deals…(01/19/22)

Written by Julie Miecamp, Managing Editor, Europe || For junk-rated debt investors the new year has started with a flurry of high-yield bonds and leveraged loan deals from repeat issuers. As market conditions in Europe remain benign due to government and central bank support, investors have been buying into well-known single B credits.

Distressed debt investors have a dearth of new opportunities to consider, although some have been busy with existing negotiations. Creditors rejected a draft plan submitted by Spanish real estate servicing company Haya Real Estate before Christmas. The deal aimed at tackling the company’s 2022 maturities. Debtholders worried that the group’s debt would be left in a less favorable position under the proposal. There has been trading in commodities merchant ED&F Man’s $1.3 billion multicurrency secured term loan and RCF before the holiday. The company and its lenders are working on a deal expected to feature an amend and extend of the term loans and RCF and some $300 million in new money from lenders in exchange for the elevation of a portion of their debt. 

Regards,
Julie Miecamp

Our European teams are working tirelessly to bring clients the most in-depth reporting and analysis of more than 2,100 performing, stressed and distressed credits in the region. Below is a glimpse into our editorial offering:

  • Banco Sabadell managed to offload a €13 million portion of Spanish fashion retailer Pepe Jeans’ term loan in late December in the low 60s, sources said. The sale comes as the retailer’s parent aims to “significantly improve [its] financial forecast for March 2022,” upping its EBITDA expectation for the year ended March 2022 by 25%. Continue reading 

  • Spanish real estate servicing company Haya Real Estate submitted a draft restructuring proposal aimed at addressing the company’s 2022 maturities in the build-up to Christmas, but it was dismissed by bondholders’ advisors, sources told Reorg. The proposal was rejected over concerns that the group’s debt would be left in a less favourable position under the proposed new structure without giving creditors anything substantial – such as an equity injection. Continue reading

  • UBS and BNP sold a $150 million piece of commodities merchant ED&F Man’s $1.3 billion multi-currency secured term loan and RCF before Christmas, sources told Reorg. The company and its lenders are working on a restructuring deal, which is expected to feature an amend and extend of the term loans and RCF and the provision of $300 million in new money from existing lenders in exchange for the elevation of a portion of their debt.  Continue reading

  • Telecommunications services and media company United Group is marketing €580 million 2030 senior secured fixed rate notes (SSNs) and €400 million 2029 senior secured floating rate notes (SS FRNs) to repay its €630 million senior secured fixed rate bridge facility and €350 million senior secured floating rate bridge facility in connection with the acquisition of Wind Hellas, which was announced in August 2020 and completed last week.  Continue reading

  • Wella is pre-sounding funds over a $1.8 billion equivalent cov-lite term loan B to refinance $1.2 billion of debt and pay shareholders KKR and Coty a $989 million dividend. The global hair products and beauty group has already pre-placed a $300 million-equivalent holdco PIK and a $300 million RCF as part of the deal, sources told Reorg. Continue reading 

Join us for a discussion of the 2022 rollout of the No Surprises Act, its business effects on select companies and its related litigation challenges in the latest installment of our webinar series. Register here.

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Reorg on the Record: Purdue, PBF Energy, Synaptics, and more topical credits… (01/12/22)

Written by Julian Bulaon, Legal Analyst, Americas Covenants || To kick off the new year, Reorg’s Americas team has prepared in-depth analyses on a number of highly topical names, including PBF Energy, SmileDirectClub and Synaptics Inc. Specifically, we discuss how regulatory considerations and drafting nuances in debt documents may expand each company’s ability to address current and future liabilities.

In PBF, we quantified the impact on the company’s financials from recent proposed renewable fuel volume targets issued by the Environmental Protection Agency. We also looked at SmileDirectClub’s cash burn and concluded that the company could seek to address its shortening liquidity runway by raising operating-company-level debt that would be structurally senior to its existing convertible notes. Our Americas Covenants team also discussed the unusually expansive structurally senior debt capacity available under Synaptics’ debt documents.

A preview of our in-depth coverage of these names, and many more, is available below.

Regards,
Julian Bulaon

Our Americas teams are working tirelessly to bring subscribers the most in-depth data, analysis and reporting on more than 1,000 performing and distressed credits. Below is a glimpse into our offering:

SmileDirectClub
The company, which has historically burned substantial amounts of free cash flow, could seek to raise structurally senior operating-company-level debt to extend the company’s liquidity runway. With a liquidity balance of $307.6 million as of Sept. 30, 2021 (consisting entirely of cash on the balance sheet), the company’s current run rate of LTM free cash flow burn would imply less than two years of liquidity runway. » Continue Reading

The Chicago Board of Education
The Chicago Board of Education, or CBOE, released through MuniOS a preliminary offering statement and road show presentation related to its planned $862.65 million issuance of unlimited tax general obligation, or ULTGO, bonds that show the transaction is expected to price on Jan. 13 and close by Feb. 1. Columbia Capital Management is advising the CBOE on the transaction. » Continue Reading

Synaptics
On Nov. 24, 2021, Synaptics – a California-based developer of human interface hardware and software, including touchpads for computer laptops – agreed to sell certain properties in San Jose, Calif., to S B C & D Co. Inc. (dba South Bay Development Co.) in a sale-leaseback transaction for a purchase price of $58 million. The company said it expects the transaction to close in the third quarter of fiscal 2022 (ending March 2022). » Continue Reading

Bankruptcy Industry Update: Outlook 2022
Restructuring professionals highlighted a number of bankruptcy issues and trends to watch out for, including non-pro-rata debt transactions, which are expected to continue until courts define the limit, releases of claims against non-debtor third parties in chapter 11, payment of interest on unsecured claims against solvent debtors, and bankruptcy venue. » Continue Reading

ION Geophysical
The provider of seismic data services and libraries to the offshore oil and gas industry, ION Geophysical, has solicited proposals for a debtor-in-possession facility from investors, indicating it is considering filing chapter 11 bankruptcy, according to sources. The company skipped $12.3 million of principal and interest payments due on Dec. 15 on two tranches of its second lien notes and entered a 30-day grace period. » Continue Reading

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