Grupo Posadas
CASE SUMMARY: Grupo Posadas Prepack Refinances 7.875% Unsecured Notes Pursuant to RSA Negotiated With Ad Hoc Noteholder Group
Tue 10/26/2021 18:50 PM
Relevant Documents:
Voluntary Petition
Press Release
First Day Declaration
Chapter 11 Plan
Disclosure Statement
Voting Declaration
Grupo Posadas, a Mexico City-based publicly traded hospitality company that owns, leases, operates and manages hotels, resorts and villas in urban and coastal areas of Mexico under various company-owned brands, filed for chapter 11 protection this morning, Tuesday, Oct. 26, in the Bankruptcy Court for the Southern District of New York. The prepackaged case was filed to restructure a balance sheet “burdened” by approximately $468.8 million in total outstanding debt.
The prepackaged plan would refinance existing 7.875% senior notes due 2022, which are the only claims impaired under the plan. All other claims and interests, including all general unsecured claims and existing equity, would ride through the case unimpaired. Common shares of Grupo Posadas are expected to continue to trade in the normal course, the company said in a press release.
Outstanding senior notes would be exchanged for new secured notes, equating to an approximately 87% estimated recovery. The new notes would be issued at up to 104% of par of the existing notes and would be secured by liens on real estate and certain accounts receivable.
As explained below, Posadas’ operations include a vacation club business. Posadas reported that the balance of its vacation club receivables portfolio as of June 30 was 6.057 billion Mexican pesos, or about $300 million. Total short- and long-term receivables on the company’s balance sheet amounted to MXN 6.804 billion.
Accounts receivable from the vacation club refers to the outstanding balance paid by members of time-share products offered by the debtors. Vacation club memberships are paid on average over a four-year period. The estimated recovery range for accounts receivable from vacation club programs, under a liquidation scenario, is 30% to 70%. The estimated recovery range for accounts receivable from hotel operations, which includes unpaid management and franchise fees, is also 30% to 70%.
Posadas’ existing 7.875% senior notes due 2022 are being offered at about 85, according to Solve Advisors.
In the run-up to the chapter 11 filing, Posadas engaged in discussion with an ad hoc group that held 33.4% of the company’s notes to garner support for a restructuring transaction. On Aug. 17, additional holders of $54.4 million, or 13% of the existing notes, executed joinder agreements to the restructuring support agreement. Further, the debtors executed a letter agreement with an additional group of holders. Together, the consenting noteholders and the additional noteholders hold about 66.66% of the outstanding existing notes.
The debtors completed solicitation on the plan prepetition, resulting in “the holders of Existing Notes Claims entitled to vote unanimously approv[ing] the Plan, with 100% in amount and 100% in number of holders of Existing Notes Claims that cast ballots voting in favor of the Plan.”
The first day hearing has been scheduled for tomorrow, Wednesday, Oct. 2,7 at 11 a.m. ET.
A capital structure is shown below:
The debtors’ five largest secured claims are as follows:
Grupo Posadas’ equity is publicly traded. Major shareholders consist of “members of the Azcárraga Andrade family, who collectively own 32.32% of the common stock of Posadas, and BLK Acciones Mexico-DISC II, S.A. de C.V., JPMorgan Chase Bank N.A. (JPM Chase Bank Treaty A/C), Banco Nacional de México, S.A. (as trustee of trust 14473-6) and CBNY Global Custody-Secore BR910, who own 12.83%, 11.89%, 8.64% and 8.21%, respectively.”
“Certain Posadas affiliates, including certain operating entities, have not filed petitions for relief and are not a part of these Chapter 11 Cases,” according to the first day declaration.
The debtors are represented by Cleary Gottlieb as international legal counsel; Ritch, Mueller y Nicolau SC and Creel, García-Cuéllar, Aiza y Enríquez SC as Mexican legal counsel; and DD3 Capital Partners as financial advisor. Shearman & Sterling represents the ad hoc group of noteholders, according to the first day declaration. Prime Clerk is the claims agent. The case has been assigned to Judge Sean H. Lane (No. 21-11831).
Events Leading to Bankruptcy Filing
Discussing the effects of the Covid-19 pandemic on its business operations, Posadas explains that to date, no Mexican state has allowed hotels to operate at 100% capacity.
In an attempt to shore up liquidity, Posadas sold certain less-efficient or unproductive assets, the first day declaration says. For example, on Jan. 31, 2020, Posadas received $5.8 million from the sale of the Fiesta Americana Hermosillo hotel. On Feb. 24, 2020, the company sold land in Nuevo Vallarta, Nayarit, for $12.8 million. In March 2021, Posadas sold the Fiesta Americana Hacienda Galindo hotel for $7.6 million, and in October the company closed a transaction to sell its 12.5% ownership in a trust controlling the construction of two hotels in the Mayan Riviera for $57.7 million.
Posadas says it plans to use the proceeds from the asset sales to pay down the $21.9 million loan it received from Grupo Bursátil Mexicano SA de CV, Casa de Bolsa. The loan is secured by the Fiesta Americana Reforma and Fiesta Americana Guadalajara hotels and guaranteed by Operadora del Golfo.
Posadas said it also plans to use the proceeds to make tax settlement payments and/or prepayments for future taxes.
Posadas has terminated several leases and management contracts. In 2020, seven hotels under Posadas brands stopped operating, with an additional four ceasing operations in 2021. As a result, Posadas’ contracts with the hotel owners were terminated. In May 2020, Posadas terminated management contracts with two hotels in Cuba operated under their own brand. The termination costs that the debtors will incur for the termination of the management contracts has not yet been determined, the first day declaration says.
In August, Posadas terminated its lease of the Grand Fiesta Americana resort in Puerto Vallarta and also the operating contract for a project under development in the Riviera Maya. As part of the termination of the Riviera Maya operating contract, Posadas sold its ownership in the corporation that will operate the hotel and said it expects to assign its rights in a trust that exists to develop the project.
Background
Grupo Posadas operates hotel management and vacation club businesses. The company owns, leases, franchises, operates and manages hotels, resorts and villas in urban and coastal areas in Mexico under various brands owned by the company, including Fiesta Americana, Grand Fiesta Americana, Fiesta Inn, One Hotels and Live Aqua. According to the debtors, Posadas is the largest hotel operator in Mexico by hotel and room count, with ownership interests in 181 hotels encompassing more than 28,500 rooms.
Historically, the company has generated most of its revenue by developing, owning and managing its hotels and resort properties. In 2012, the company began shifting its focus to ownership of strategic assets - selling several hotels and other nonstrategic assets - and growing its hotel management business by leveraging its experience as a hotel operator, its brands and trademarks, its proprietary reservation system and technological investments and its loyalty rewards and vacation club programs. This approach has supported the company’s growth while minimizing its capital costs, the debtors say.
In 2020, the operation, management and franchising of hotels collectively generated approximately 40% of the company’s revenue, down from approximately 60% in prior years due to the Covid-19 pandemic. In prior years, these services have generated about 60% of the company’s consolidated revenue.
The company’s hotel management and operation business includes revenue generated from its brands and trademarks. In recent years, Posadas has focused on entering into management agreements with local partners to develop new properties and by converting already existing properties to the company’s brands. The company has begun to market franchising services in respect of some of its brands, such as Gamma, One Hotels, Curamoria, Fiesta Inn and Explorean. The company also enters into agreements for the use of its brands from which it receives royalty income.
The debtors say Posadas is a leader in the vacation ownership industry, which accounts for a significant portion of its total revenue. The company’s portfolio includes nine brands in the hotel market and four in the vacation ownership market, with 24 points of sale in Mexico, where the company offers its products in the vacation club market. These products include Fiesta Americana Vacation Club, a 40-year-old points-based membership program.
The company operates a similar member program aimed at the upscale luxury hotel market, Live Aqua Residence Club, as well as Kívac, a prepaid lodging program, and Fiesta Americana Access, a discount program membership. In 2020, the vacation club business generated almost 60% of the company’s revenue, due in large part to the impact of Covid-19 on the hotel business. In prior years, the vacation club business generated approximately 40% of the company’s revenue.
Posadas also operates management services and technology platforms, which provide critical logistical, administrative, information technology and data analytical support to its operating affiliates as well as to other third-party customers. In 2020, these businesses generated less than 10% of the company’s total revenue.
The debtors’ organizational chart is shown below:
The debtors' largest unsecured creditors are listed below:
Plan / Disclosure Statement
Below is a chart of the plan’s classes, along with their impairment status and voting rights.
Treatment of Claims and Interests
The debtors’ plan sets forth the following classification of and proposed distributions to holders of allowed claims and interests:
The terms of the plan broadly contemplate issuance of $392.6 million in new senior notes to be exchanged for the company’s outstanding senior notes, including their terms, conditions and “guarantees/collaterals.” Specifically, for each i) $1,000 principal amount and ii) the discharge in full of all accrued and unpaid interest prior to the petition date, holders receive new notes amounting to $1,000 plus additional principal equal to “[4%] of a $1,000 principal amount … multiplied by (y) a fraction equal to (A) the number of days that has elapsed from (and including) August 1, 2021 to (and including) the Plan Effective Date divided by (B) [360] days.”
Plan Milestones
The restructuring milestones contemplated under the DS are as follows:
Other Plan Provisions
The plan provides for releases of the debtors, reorganized debtors and “each direct or indirect subsidiary of the Debtors or Reorganized Debtors,” consenting noteholders, existing noteholders that execute an agreement with the debtors agreeing not to object to the restructuring, provided that holders of any claim or interest that opts out of the releases would not be a released party. In addition, the plan includes an exculpation provision in favor of the debtors, any official committee and its members, and “to the maximum extent permitted by applicable Law,” consenting noteholders and the existing notes trustee.
According to the plan, the officers and directors of the new board would be identified in a plan supplement.
Financial Projections
The debtors provide financial projections in the DS, as follows:
As shown above, the debtors anticipate leverage declining to 3.3x by 2026. EBITDA is expected to decline by 10.4% in 2022, as an 8% increase in costs offsets a 7% increase in total income.
Subsequently, the company forecasts expansions in EBITDA each year.
Posadas’ 2019 revenue was MXN 9.072 billion, while EBITDA was MXN 1.567 billion, which translates to $481 million and $83 million of revenue and EBITDA (17% margin), respectively, using a disclosed exchange rate of 1 USD = 18.8727 MXN.
Liquidation Analysis
The DS includes a hypothetical liquidation analysis, as follows:
Voluntary Petition
Press Release
First Day Declaration
Chapter 11 Plan
Disclosure Statement
Voting Declaration
| Summary |
| Grupo Posadas is a publicly traded hospitality company that owns, leases, operates and manages hotels, resorts and villas in Mexico under various company-owned brands |
| Under the plan, the $393 million 7.875% unsecured creditors would receive at least par (nominally) in take-back debt secured by liens over real estate and receivables.The debtors have agreed to discharge in full all accrued and unpaid interest prior to the petition date. On June 30 and Dec. 30, 2020, as well as June 30, 2021, Posadas defaulted on its interest payment obligations under the 7.875% notes |
| The debtors have completed solicitation, with 100% of existing note claims voting in favor of the plan |
| The debtors forecast net leverage to decline from 10.3x at the end of 2022 to 3.3x at the end of 2026 |
Grupo Posadas, a Mexico City-based publicly traded hospitality company that owns, leases, operates and manages hotels, resorts and villas in urban and coastal areas of Mexico under various company-owned brands, filed for chapter 11 protection this morning, Tuesday, Oct. 26, in the Bankruptcy Court for the Southern District of New York. The prepackaged case was filed to restructure a balance sheet “burdened” by approximately $468.8 million in total outstanding debt.
The prepackaged plan would refinance existing 7.875% senior notes due 2022, which are the only claims impaired under the plan. All other claims and interests, including all general unsecured claims and existing equity, would ride through the case unimpaired. Common shares of Grupo Posadas are expected to continue to trade in the normal course, the company said in a press release.
Outstanding senior notes would be exchanged for new secured notes, equating to an approximately 87% estimated recovery. The new notes would be issued at up to 104% of par of the existing notes and would be secured by liens on real estate and certain accounts receivable.
As explained below, Posadas’ operations include a vacation club business. Posadas reported that the balance of its vacation club receivables portfolio as of June 30 was 6.057 billion Mexican pesos, or about $300 million. Total short- and long-term receivables on the company’s balance sheet amounted to MXN 6.804 billion.
Accounts receivable from the vacation club refers to the outstanding balance paid by members of time-share products offered by the debtors. Vacation club memberships are paid on average over a four-year period. The estimated recovery range for accounts receivable from vacation club programs, under a liquidation scenario, is 30% to 70%. The estimated recovery range for accounts receivable from hotel operations, which includes unpaid management and franchise fees, is also 30% to 70%.
Posadas’ existing 7.875% senior notes due 2022 are being offered at about 85, according to Solve Advisors.
In the run-up to the chapter 11 filing, Posadas engaged in discussion with an ad hoc group that held 33.4% of the company’s notes to garner support for a restructuring transaction. On Aug. 17, additional holders of $54.4 million, or 13% of the existing notes, executed joinder agreements to the restructuring support agreement. Further, the debtors executed a letter agreement with an additional group of holders. Together, the consenting noteholders and the additional noteholders hold about 66.66% of the outstanding existing notes.
The debtors completed solicitation on the plan prepetition, resulting in “the holders of Existing Notes Claims entitled to vote unanimously approv[ing] the Plan, with 100% in amount and 100% in number of holders of Existing Notes Claims that cast ballots voting in favor of the Plan.”
The first day hearing has been scheduled for tomorrow, Wednesday, Oct. 2,7 at 11 a.m. ET.
A capital structure is shown below:
|
10/25/2021 |
EBITDA Multiple |
||||
|---|---|---|---|---|---|
|
(MXN in Millions) |
Amount |
US$ Amt. |
Maturity |
Rate |
Book |
|
|
|||||
|
$210M Bank Loan 1 |
159.0 |
7.8 |
Jun-24-2024 |
9.175% |
|
|
Total Subsidiary Debt |
159.0 |
7.8 |
0.2x |
||
|
Senior Notes Due 2022 2 |
7,775.0 |
382.8 |
Jun-30-2022 |
7.875% |
|
|
Total Senior Notes |
7,775.0 |
382.8 |
8.3x |
||
|
Lease Liability |
3,272.0 |
161.1 |
|
|
|
|
Total Lease Liability |
3,272.0 |
161.1 |
11.7x |
||
|
Total Debt |
11,206.0 |
551.7 |
11.7x |
||
|
Less: Cash and Equivalents |
(2,166.0) |
(106.6) |
|||
|
Net Debt |
9,040.0 |
445.1 |
9.4x |
||
|
Operating Metrics |
US$ Amt. |
||||
|
LTM Reorg EBITDA |
961.2 |
47.3 |
|||
|
|
|||||
|
Liquidity |
|||||
|
Plus: Cash and Equivalents |
2,166.0 |
106.6 |
|||
|
Total Liquidity |
2,166.0 |
106.6 |
|||
|
Credit Metrics |
|||||
|
Gross Leverage |
11.7x |
||||
|
Net Leverage |
9.4x |
||||
|
Notes:
Prepetition amounts outstanding based on first day declaration; lease liability based on Q3 2021 earnings report. The $21.9 million 2021 Liquidity Facility was paid in full prior to the Petition Date with proceeds from the sale of Tulkal. 1. On April 23, 2021, the third modifying agreement was signed where the payment of principal is being deferred for 12 additional months and the interest payment modality is changed from monthly to quarterly, this applies until April 23, 2022. 2. Company did not make June 2020, December 2020 or June 2021 interest payments. US$ Translation: MXN/USD rate used for USD conversion is 20.31. |
|||||
The debtors’ five largest secured claims are as follows:
Grupo Posadas’ equity is publicly traded. Major shareholders consist of “members of the Azcárraga Andrade family, who collectively own 32.32% of the common stock of Posadas, and BLK Acciones Mexico-DISC II, S.A. de C.V., JPMorgan Chase Bank N.A. (JPM Chase Bank Treaty A/C), Banco Nacional de México, S.A. (as trustee of trust 14473-6) and CBNY Global Custody-Secore BR910, who own 12.83%, 11.89%, 8.64% and 8.21%, respectively.”
“Certain Posadas affiliates, including certain operating entities, have not filed petitions for relief and are not a part of these Chapter 11 Cases,” according to the first day declaration.
The debtors are represented by Cleary Gottlieb as international legal counsel; Ritch, Mueller y Nicolau SC and Creel, García-Cuéllar, Aiza y Enríquez SC as Mexican legal counsel; and DD3 Capital Partners as financial advisor. Shearman & Sterling represents the ad hoc group of noteholders, according to the first day declaration. Prime Clerk is the claims agent. The case has been assigned to Judge Sean H. Lane (No. 21-11831).
Events Leading to Bankruptcy Filing
Discussing the effects of the Covid-19 pandemic on its business operations, Posadas explains that to date, no Mexican state has allowed hotels to operate at 100% capacity.
In an attempt to shore up liquidity, Posadas sold certain less-efficient or unproductive assets, the first day declaration says. For example, on Jan. 31, 2020, Posadas received $5.8 million from the sale of the Fiesta Americana Hermosillo hotel. On Feb. 24, 2020, the company sold land in Nuevo Vallarta, Nayarit, for $12.8 million. In March 2021, Posadas sold the Fiesta Americana Hacienda Galindo hotel for $7.6 million, and in October the company closed a transaction to sell its 12.5% ownership in a trust controlling the construction of two hotels in the Mayan Riviera for $57.7 million.
Posadas says it plans to use the proceeds from the asset sales to pay down the $21.9 million loan it received from Grupo Bursátil Mexicano SA de CV, Casa de Bolsa. The loan is secured by the Fiesta Americana Reforma and Fiesta Americana Guadalajara hotels and guaranteed by Operadora del Golfo.
Posadas said it also plans to use the proceeds to make tax settlement payments and/or prepayments for future taxes.
Posadas has terminated several leases and management contracts. In 2020, seven hotels under Posadas brands stopped operating, with an additional four ceasing operations in 2021. As a result, Posadas’ contracts with the hotel owners were terminated. In May 2020, Posadas terminated management contracts with two hotels in Cuba operated under their own brand. The termination costs that the debtors will incur for the termination of the management contracts has not yet been determined, the first day declaration says.
In August, Posadas terminated its lease of the Grand Fiesta Americana resort in Puerto Vallarta and also the operating contract for a project under development in the Riviera Maya. As part of the termination of the Riviera Maya operating contract, Posadas sold its ownership in the corporation that will operate the hotel and said it expects to assign its rights in a trust that exists to develop the project.
Background
Grupo Posadas operates hotel management and vacation club businesses. The company owns, leases, franchises, operates and manages hotels, resorts and villas in urban and coastal areas in Mexico under various brands owned by the company, including Fiesta Americana, Grand Fiesta Americana, Fiesta Inn, One Hotels and Live Aqua. According to the debtors, Posadas is the largest hotel operator in Mexico by hotel and room count, with ownership interests in 181 hotels encompassing more than 28,500 rooms.
Historically, the company has generated most of its revenue by developing, owning and managing its hotels and resort properties. In 2012, the company began shifting its focus to ownership of strategic assets - selling several hotels and other nonstrategic assets - and growing its hotel management business by leveraging its experience as a hotel operator, its brands and trademarks, its proprietary reservation system and technological investments and its loyalty rewards and vacation club programs. This approach has supported the company’s growth while minimizing its capital costs, the debtors say.
In 2020, the operation, management and franchising of hotels collectively generated approximately 40% of the company’s revenue, down from approximately 60% in prior years due to the Covid-19 pandemic. In prior years, these services have generated about 60% of the company’s consolidated revenue.
The company’s hotel management and operation business includes revenue generated from its brands and trademarks. In recent years, Posadas has focused on entering into management agreements with local partners to develop new properties and by converting already existing properties to the company’s brands. The company has begun to market franchising services in respect of some of its brands, such as Gamma, One Hotels, Curamoria, Fiesta Inn and Explorean. The company also enters into agreements for the use of its brands from which it receives royalty income.
The debtors say Posadas is a leader in the vacation ownership industry, which accounts for a significant portion of its total revenue. The company’s portfolio includes nine brands in the hotel market and four in the vacation ownership market, with 24 points of sale in Mexico, where the company offers its products in the vacation club market. These products include Fiesta Americana Vacation Club, a 40-year-old points-based membership program.
The company operates a similar member program aimed at the upscale luxury hotel market, Live Aqua Residence Club, as well as Kívac, a prepaid lodging program, and Fiesta Americana Access, a discount program membership. In 2020, the vacation club business generated almost 60% of the company’s revenue, due in large part to the impact of Covid-19 on the hotel business. In prior years, the vacation club business generated approximately 40% of the company’s revenue.
Posadas also operates management services and technology platforms, which provide critical logistical, administrative, information technology and data analytical support to its operating affiliates as well as to other third-party customers. In 2020, these businesses generated less than 10% of the company’s total revenue.
The debtors’ organizational chart is shown below:
(Click HERE to enlarge.)
The debtors' largest unsecured creditors are listed below:
| 10 Largest Unsecured Creditors | |||
| Creditor | Location | Claim Type | Amount |
|---|---|---|---|
| Citibank NA | New York | 7.875% Senior
Notes Due 2022 |
$ 392,605,000 |
| Servicio de Administración
Tributaria (Internal Revenue Services) |
Mexico City | Tax Credits -
March 2022 Installment |
17,715,672 |
| Servicio de Administración
Tributaria (Internal Revenue Services) |
Mexico City | Tax Credits -
March 2023 Installment |
17,715,672 |
| SIGMA Foodservice
Commercial S DE RL DE CV |
Santa Catarina,
Mexico |
N/S | 1,185,532 |
| Promotora Torcaz SA
DE CV |
Mexico City | N/S | 1,023,013 |
| Accentures SC | Mexico City | N/S | 678,662 |
| TravelClick Inc. | Schaumburg, Ill. | N/S | 598,480 |
| Booking.com BV | Amsterdam | N/S | 507,011 |
| Oracle DE Mexico SA
DE CV |
Mexico City | N/S | 381,662 |
| Telefonos DE Mexico
SAB DE CV |
Mexico City | N/S | 371,149 |
The case representatives are as follows:
| Representatives | |||
| Role | Name | Firm | Amount |
|---|---|---|---|
| Debtors' Counsel | Richard J. Cooper | Cleary Gottlieb
Steen & Hamilton |
New York |
| Jane VanLare | |||
| Jorge U. Juantorena | |||
|
Debtors' Mexican
Legal Counsel |
N/S | Ritch, Mueller
y Nicolau |
N/S |
| Debtors' Mexican
Legal Counsel |
N/S | Creel, García-Cuéllar,
Aiza y Enríquez |
N/S |
| Debtors' Financial
Advisor |
N/S | DD3 Capital
Partners |
N/S |
| Counsel to the Ad
Hoc Group of Noteholders |
Mark J. Shapiro | Shearman
& Sterling |
New York |
| Joel Moss | |||
| Jordan A. Wishnew | |||
| Debtors' Claims
Agent |
N/S | Prime Clerk | New York |
| Debtors' Balloting
Agent |
Craig E. Johnson | Prime Clerk | New York |
Plan / Disclosure Statement
Below is a chart of the plan’s classes, along with their impairment status and voting rights.
Treatment of Claims and Interests
The debtors’ plan sets forth the following classification of and proposed distributions to holders of allowed claims and interests:
The terms of the plan broadly contemplate issuance of $392.6 million in new senior notes to be exchanged for the company’s outstanding senior notes, including their terms, conditions and “guarantees/collaterals.” Specifically, for each i) $1,000 principal amount and ii) the discharge in full of all accrued and unpaid interest prior to the petition date, holders receive new notes amounting to $1,000 plus additional principal equal to “[4%] of a $1,000 principal amount … multiplied by (y) a fraction equal to (A) the number of days that has elapsed from (and including) August 1, 2021 to (and including) the Plan Effective Date divided by (B) [360] days.”
Plan Milestones
The restructuring milestones contemplated under the DS are as follows:
- Nov. 10, 2021 (15 days of petition date): Filing of plan solicitation motion and RSA assumption motion;
- Nov. 15 (20 days of petition date): Entry of RSA assumption order;
- Dec. 25 (60 days of petition date): Entry of confirmation order (debtors may extend deadline by 60 days under certain conditions); and
- Jan. 9, 2022 (75 days of petition date): Occurrence of effective date (if the confirmation order deadline is extended to 120 days, then this deadline would be extended to 135 days after the petition date).
Other Plan Provisions
The plan provides for releases of the debtors, reorganized debtors and “each direct or indirect subsidiary of the Debtors or Reorganized Debtors,” consenting noteholders, existing noteholders that execute an agreement with the debtors agreeing not to object to the restructuring, provided that holders of any claim or interest that opts out of the releases would not be a released party. In addition, the plan includes an exculpation provision in favor of the debtors, any official committee and its members, and “to the maximum extent permitted by applicable Law,” consenting noteholders and the existing notes trustee.
According to the plan, the officers and directors of the new board would be identified in a plan supplement.
Financial Projections
The debtors provide financial projections in the DS, as follows:
(Click HERE to enlarge.)
As shown above, the debtors anticipate leverage declining to 3.3x by 2026. EBITDA is expected to decline by 10.4% in 2022, as an 8% increase in costs offsets a 7% increase in total income.
Subsequently, the company forecasts expansions in EBITDA each year.
Posadas’ 2019 revenue was MXN 9.072 billion, while EBITDA was MXN 1.567 billion, which translates to $481 million and $83 million of revenue and EBITDA (17% margin), respectively, using a disclosed exchange rate of 1 USD = 18.8727 MXN.
Liquidation Analysis
The DS includes a hypothetical liquidation analysis, as follows:
(Click HERE to enlarge.)
(Click HERE to enlarge.)
(Click HERE to enlarge.)
Other MotionsThe debtors also filed various standard first day motions, including the following:
- Motion for joint administration
- The cases will be jointly administered under case No. 21-11831.
- Motion to pay employee wages and benefits
- The debtors estimate that they have approximately $2.5 million in employee compensation obligations, $2.1 million in deduction obligations that will become payable within the first 22 days of the chapter 11 cases, $60,000 in reimbursable expense obligations, $48,000 in obligations owed to payroll vendors UNET, ONO and ORACLE, $383,000 of unpaid savings plan obligations and $1.1 million in obligations arising from other employee benefit programs.
- Motion to use cash management system
- The company has bank accounts with Banco Nacional de México, BBVA Bancomer, Citibank, JPMorgan Chase Bank, Grupo Financiero Santander, Banco Sabadell, Banco Mercantil del Norte and Northern Trust Corp.
- Motion to continue supplier financing program
- The debtors have an arrangement with Nacional Financiera SNC, or NAFINSA, a national development bank owned by the Mexican government, in the form of a financing platform that facilitates supplier credit lines to help manage the debtors’ payment or performance of certain obligations regarding the purchase of supplies, inventory and services. The debtors generally purchase their inventory and pay for services on 90-day payment terms, and the supplier can then factor their receivables generated from the sale of goods and services to the debtors through the debtors’ credit line with Banca Mifel credit line or NAFINSA directly under the supplier financing program. As of the petition date, the debtors have (a) approximately $2.7 million in outstanding supplier credit line obligations under the Banca Mifel credit line that will become due within the first 30 days of the bankruptcy case and (b) approximately $728,300 in outstanding payments to NAFINSA for excess receivables that will become due within the first 30 days of these chapter 11 cases. The debtors seek authority to pay obligations arising under the supplier financing program and to continue the program “as needed in the ordinary course of business.”
- Motion to maintain insurance programs
- Motion to pay taxes and fees
- The debtors seek approval to pay up to $6.4 million in tax obligations, including $2.9 million in employer withholding taxes and $2.4 million in VAT.
- Motion to continue prepetition business operations, policies and practices and pay related claims in the ordinary course of business on a postpetition basis
- The debtors seek to pay the following amounts, noting that the prepackaged plan provides for a 100% recovery for general unsecured claims and therefore the payments affect only when, and not whether or how much, these creditors will be paid:
- Motion to continue customer programs
- Motion to impose automatic stay
- Motion to file consolidated equity and creditor lists
- Motion to extend the schedules filing deadline to Jan. 7, 2022
- Application to appoint Prime Clerk as claims and noticing agent
This article is an example of the content you may receive if you subscribe to a product of Reorg Research, Inc. or one of its affiliates (collectively, “Reorg”). The information contained herein should not be construed as legal, investment, accounting or other professional services advice on any subject. Reorg, its affiliates, officers, directors, partners and employees expressly disclaim all liability in respect to actions taken or not taken based on any or all the contents of this publication. Copyright © 2024 Reorg Research, Inc. All rights reserved.