Fri 08/17/2018 13:36 PM
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Checkout Holding Corp., formerly known as Catalina Marketing, held pitches last week for an operational advisor as the company seeks to complete a turnaround and improve its capital structure, according to sources. The operational advisor would join the company’s legal counsel Weil Gotshal and investment banker Centerview Partners as advisors to the company.

Catalina released earnings results for the second quarter ended June 30 this week, reporting adjusted EBITDA of $43.8 million, down 9.7% year over year but exceeding the company’s projection previously provided in a budget shared with investors earlier this year, according to sources with access to the financials. On a conference call yesterday to review results, however, the company said that it is likely to miss its budgeted EBITDA projection for the second half of the year because of continuing headwinds in the U.S. segment, according to sources. The capital expenditures budget was reduced from the $50 million range to the mid-$30 million range for the full year, add sources.

By geography, adjusted EBITDA in the U.S. was down approximately 15% year over year to approximately $39 million, adjusted EBITDA in Europe was up 45% year over year to $8.4 million, and the Japan region’s adjusted EBITDA was down 11.9% year over year to $6.4 million, sources say. Corporate adjusted EBITDA totaled negative approximately $10 million, sources add.

The company ended the quarter with $50 million in cash, up from $32 million at the end of fiscal 2018, sources say, adding that the company generated cash in the quarter and that the revolver had $20 million in borrowings at the end of the quarter.

The company's first lien term loan was quoted this afternoon at 52/56 and the second lien term loan was quoted at 11.5/13 this afternoon, according to a trading desk.

As previously reported, Catalina is engaged in discussions with advisors to its various creditor constituencies regarding efforts to restructure its debt outside of court, though the parties have thus far been unable to reach an agreement on refinancing terms, and the process may soon shift to discussing in-court options, according to sources. A group of majority term lenders is advised by Jones Day and Evercore, a group of second lien lenders is advised by Paul Weiss and PJT Partners, and a Crescent-led unsecured noteholder group is advised by Debevoise & Plimpton and Houlihan Lokey.

Catalina Marketing declined to comment for this story.
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