Thu 04/19/2018 15:43 PM
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Jones Day, as legal counsel to a group of lenders to Crossmark Holdings Inc., held a call today for the group in order to discuss options for the company's capital structure. The group is considering the possibility of a sale of the company, a refinancing or a potential in-court restructuring, sources add. Crossmark released earnings today to its creditors and will hold a conference call with lenders to review the results next Thursday, April 26, sources also say.

The lender group, which includes more than 65% of first lien lenders and 50% of the company’s second lien term loan, has organized with the intention of proactively reaching out to the company in order to discuss options for Crossmark’s capital structure, sources tell Reorg, adding that the group has not yet brought on a financial advisor. The company has been running a sale process through BofA Merrill Lynch, sources also indicate.

The Texas-based sales and marketing company, which operates within the struggling consumer goods industry, faces a June 2019 expiration on its revolver and a December 2019 maturity of its $400 million first lien term loan, according to a Sept. 7, 2017, Moody's Investors Service report. The report downgraded certain ratings for Crossmark, including the company's corporate family rating to Caa2 from Caa1, citing liquidity pressure and high leverage levels. According to the Moody’s report, the company’s free cash flow turned negative for the first half of 2017. The ratings agency said it expects potential covenant pressure in early 2018 to constrain revolver availability, noting the revolver expiration and first lien term loan maturity in 2019. According to Moody’s, the revolver had a $52.5 million balance at the time of the agency’s report.

The company’s $400 million first lien term loan maturing Dec. 21, 2019, was quoted at 49/52, up from 48.25/50.25 Wednesday; the company’s revolver was quoted at 48/50, and the company’s $90 million second lien term loan due Dec. 21, 2020, was quoted today at 35/55, according to a trading desk.

Crossmark was taken private by private equity firm Warburg Pincus in 2012. The company’s services include headquarter sales, retail merchandising, retailer solutions, in-store data collection, event marketing, experiential marketing, shopper marketing, retail analytics and retail technology solutions, according to the website of Warburg Pincus. Crossmark employs more than 36,000 associates worldwide with more than 45 offices throughout the United States, Canada, Mexico, Australia and New Zealand, the sponsor adds.

The first lien term loan facility accrues interest at LIBOR+350 bps with a 1% floor, and the second lien term loan accrues interest at L+750 bps with a 1.25% floor, according to AdvantageData.

Crossmark, Warburg Pincus and Jones Day did not immediately respond to requests for comment.
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