Wed 07/22/2020 11:28 AM
Dutch plant and flower business Dümmen Orange is working with Rothschild and Kirkland & Ellis as financial and legal advisors, respectively, for potential upcoming debt negotiations, sources told Reorg.

The group is in preliminary talks with its RCF lenders about a possible leverage covenant waiver, sources said. The company is also considering a new money injection but nothing has been decided in terms of size and who might provide the funds, sources added.

The company’s existing €70 million revolving credit facility was drawn by about €60 million at the end of April. The group will have to repay part of this amount to be compliant with its springing net leverage covenant set at 7.3x when the facility is drawn by more than 35%.

Dümmen Orange’s leverage exceeds 7.3x at the moment. The company met its covenant at the end of March. The next test was scheduled at the end of June - with a period of 45 days to test after the actual testing date. The group’s cash at the end of May amounted to €17.5 million, sources said.

A group of Dümmen Orange lenders including JP Morgan Asset Management, Triton and ICG is working with Houlihan Lokey and Sullivan & Cromwell, as reported. The majority of the company’s par lenders including Alcentra have sold out.

Before the start of the coronavirus pandemic, Dümmen Orange was already suffering from declining EBITDA and tightening liquidity. Due to the negative effects of the pandemic, the group recorded negative EBITDA during April. Its trading in May has improved as lockdown restrictions eased and garden centers reopened.

Dümmen Orange’s sponsor BC Partners has bought about 25% of the term loan over the last few months but it is unclear what it may be able to do with its stake if the company enters a restructuring procedure, such as an English scheme of arrangement.

In addition to the RCF, the group’s debt includes a €425 million term loan B due in 2024, which pays Euribor+350 basis points and is currently quoted in the mid-20s. The company originally raised €350 million in 2015 when BC Partners took a majority stake in the business. Dümmen Orange subsequently launched a €75 million add-on in 2017 to fund acquisitions.

Reorg Debt Explained analyzed the group’s legal documentation at the time of the deal. For a copy of the full report click HERE

-- Luca Rossi
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