Monitronics
Monitronics Noteholder, Lender Advisors Continue to Complete Due Diligence; Earlier Bondholder Proposal Contemplated New-Money Infusion, Exchange of Unsecured Notes Into Second Lien Debt
Thu 07/26/2018 14:38 PM
Advisors to both Monitronics bondholders and term lenders are completing due diligence under non-disclosure agreements as the company looks to refinance its 9.125% unsecured notes due April 2020, according to sources. The company faces an October 2019 springing maturity on both its senior secured revolver and $1.1 billion senior secured term loan due 2022 in the event that any of the company’s $585 million of 9.125% unsecured notes are outstanding at that time.
In recent months, and prior to the formation of a bondholder group now advised by Houlihan Lokey and Stroock & Stroock, a large noteholder had proposed an exchange offer to the company that would involve a new-money cash investment and a refinancing of the unsecured notes into second lien debt, according to sources. The proposal would have required an amendment to the company’s credit agreement in order to allow for more than $150 million in secured financing, sources note. As previously discussed by Reorg Covenants, the company’s notes indenture and credit agreement currently limit the company’s access to secured capacity at approximately $150 million.
After submitting its proposal, the large noteholder organized the now-existing noteholder group, which sources indicate comprises at least 66% of the notes tranche. Under non-disclosure agreements, the company and the noteholder group’s advisors have since exchanged refinancing proposals, though principal members of the group have not seen these proposals, as they are not restricted, sources say.
Sources note that there is no definitive agreement between the parties at this time, and the company may launch an exchange offer without first reaching an agreement on terms with the noteholders. The noteholders have indicated to the company, however, that they would be more likely to consent to a privately negotiated deal than to an exchange launched by the company without the support of the group, sources say.
Advisors to a group of majority term loan lenders, Jones Day and Evercore, are also completing due diligence under non-disclosure agreements, as noted above.
The company’s notes traded today at 72.5 according to TRACE, and the term loan was quoted by a trading desk today at 93.5/94.5. The company’s capital structure as of May 14 is shown below.
The company is advised by Latham & Watkins, Morgan Stanley and Bank of America.
Monitronics did not respond to requests for comment.
In recent months, and prior to the formation of a bondholder group now advised by Houlihan Lokey and Stroock & Stroock, a large noteholder had proposed an exchange offer to the company that would involve a new-money cash investment and a refinancing of the unsecured notes into second lien debt, according to sources. The proposal would have required an amendment to the company’s credit agreement in order to allow for more than $150 million in secured financing, sources note. As previously discussed by Reorg Covenants, the company’s notes indenture and credit agreement currently limit the company’s access to secured capacity at approximately $150 million.
After submitting its proposal, the large noteholder organized the now-existing noteholder group, which sources indicate comprises at least 66% of the notes tranche. Under non-disclosure agreements, the company and the noteholder group’s advisors have since exchanged refinancing proposals, though principal members of the group have not seen these proposals, as they are not restricted, sources say.
Sources note that there is no definitive agreement between the parties at this time, and the company may launch an exchange offer without first reaching an agreement on terms with the noteholders. The noteholders have indicated to the company, however, that they would be more likely to consent to a privately negotiated deal than to an exchange launched by the company without the support of the group, sources say.
Advisors to a group of majority term loan lenders, Jones Day and Evercore, are also completing due diligence under non-disclosure agreements, as noted above.
The company’s notes traded today at 72.5 according to TRACE, and the term loan was quoted by a trading desk today at 93.5/94.5. The company’s capital structure as of May 14 is shown below.
The company is advised by Latham & Watkins, Morgan Stanley and Bank of America.
Monitronics did not respond to requests for comment.
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