Wed 11/11/2020 12:23 PM
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Relevant Document:
2019 Report

Lenders have been attempting to offload loans issued by airfield lighting and gate solutions provider ADB Safegate with quotes in the high 70s and at about 80 but no loans traded, sources told Reorg.

A lender recently accepted a request from the company to PIK the interest on its €100 million-equivalent second lien dollar-denominated term loan for interest due Sept. 3. The interest has been added to the principal in exchange for a 100 basis point increase in margin to 3.5%. The second lien debt was pre-placed with MV Credit, according to Reuters.

The group says it is also exploring additional measures to strengthen liquidity, in particular mechanisms set up by the Belgian government to support companies during the Covid-19 crisis.

The company says the effect of Covid-19 on the group’s business has been limited so far. Full-year 2019 revenue rose 1.4% year over year to €375.9 million. The customer backlog of 30 orders to April was 5% above budget with new orders flowing in line with budget expectations. However, management said it expects a future risk to income as airports and airlines delay capital expenditure.

One factory in Tianjin, China, was closed until the end of February. However, China accounts for 4.4% of group revenue. ADB’s factory in Zaventem, Belgium remained open during the lockdown period but at 80% capacity.

A breakdown of ADB Safegate’s debt is below:
  • €285 million TLB at Euribor+3.5% due October 2024;
  • €120 million TLB dollar equivalent at LIBOR+4.25% due October 2024;
  • €80 million RCF +3.25% due 2023; and
  • €100 million second lien loan dollar-denominated E+3.5% due 2025.
The springing RCF covenant is set at 7.7x and tested quarterly when drawn more than 35%. ADB fully drew the RCF on March 16 in response to Covid-19. The drawdown triggered a covenant test for March 31, which the company passed. The company said it expects to pass all covenant tests in 2020. Credit Suisse, Citi, HSBC, Deutsche Bank, BNP Paribas, Bank of Ireland and ING underwrote the initial debt financing.

-- Aurelia Seidlhofer, Connor Lovell 
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