Fri 11/12/2021 08:19 AM
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German gaming company Lowen Play and its lenders are aiming to find an informal agreement to address the company’s 5.375% 2022 bond maturity before year-end, sources told Reorg. To view the relevant documents linked as well as our EMEA Core Credit team's coverage of thousands of other stressed/distressed debt situations including our Lowen Play refinancing analysis, request a trial here: https://reorg.com/trial

The company had worked on refinancing the bond in the summer with Latham & Watkins and Rothschild but a deal, which would have included a €10 million equity injection from the sponsor Ardian, collapsed. The proposal featured a first lien bond with a higher coupon than the current one, and a €50 million second lien bond with a part-cash, part-PIK coupon, sources said.

Management said it felt that the envisaged coupons were not sustainable for the business and would weigh too much on the company’s cash generation, and the refinancing didn’t go ahead, sources added.

The company and its lenders are now exploring various options for an amend-and-extend solution. Some investors said the new deal might feature a smaller senior bond than the one envisaged in the collapsed deal but with a similar coupon alongside a bigger junior instrument with a PIK coupon and equity rights attached. Other sources said that the company could explore a solution with a lower cash coupon in combination with other instruments.

In late October, the company released a cleansing statement, and bondholders organized and appointed PJT and K&E to advise in ongoing restructuring negotiations. The bondholder group includes Jupiter, GLG and Albacore, sources said. The company’s RCF lenders have been working with White & Case.

Sources say that the bondholder group represents more than 75% of the value of the bond and the fact that the group was already close to a deal before will make it easier to come to an agreement.

On Nov. 4, Lowen Play confirmed that it received the €36.6 million in German state aid that it had applied for.

Lowen Play's capital structure as at the end of June is below:

























































































































































































































Lowen Play GmbH


06/30/2021

EBITDA Multiple

(EUR in Millions)

Amount

Price

Mkt. Val.

Maturity

Rate

Yield

Book

Market


Finance Leases Machines

35.1


35.1




Total Finance Leases Machines

35.1

35.1

3.3x

3.3x

€40M Senior Secured RCF 1

40.0


40.0

Aug-2022

E/L + 2.750%


Total Super Senior RCF

40.0

40.0

7.1x

7.1x

€350M SSN - Safari Verwaltungs

350.0

95.4

333.8

Nov-30-2022

5.375%

7.974%

Total Senior Secured Bond

350.0

333.8

40.1x

38.6x

Leases buildings (IFRS 16)

130.1


130.1




Total Leases buildings (IFRS 16)

130.1

130.1

52.4x

50.8x

Subordinated Shareholder loan

188.9


188.9




Total Shareholder Loan

188.9

188.9

70.2x

68.7x

Total Debt

744.1

727.9

70.2x

68.7x

Less: Cash and Equivalents

(84.7)

(84.7)

Plus: Restricted Cash

11.4

11.4

Net Debt

670.8

654.6

63.3x

61.8x

Operating Metrics

LTM Revenue

111.5

LTM Reported EBITDA

10.6


Liquidity

RCF Commitments

40.0

Less: Drawn

(40.0)

Plus: Cash and Equivalents

84.7

Less: Restricted Cash

(11.4)

Total Liquidity

73.3

Credit Metrics

Gross Leverage

70.2x

Net Leverage

63.3x

Notes:
Restricted cash refers to cash in cash boxes and tube filling. LTM EBITDA is the reported EBITDA post IFRS 16.
1. The group fully drew the RCF on March 24, 2020. Notes & RCF pari passu, in enforcement RCF is super senior. RCF has a leverage covenant of 4.67x tested quarterly under certain circumstances. Interest rate on RCF subject to reduction.



--Luca Rossi, Aurelia Seidlhofer
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