Wed 07/06/2022 16:59 PM
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Output Services Group is preparing to file a prepackaged chapter 11 bankruptcy as soon as August, according to sources.

The provider of printing and mailing of customer invoices and bills has a restructuring support agreement in place with sponsor Aquiline Capital Partners and first lien lenders, the sources said. The company is expected to receive new capital while cutting debt as part of its in-court restructuring process, they added.

The proposed transaction involves the extension of the first lien debt’s maturity beyond the original, and the terms on the second lien debt include conversion to more junior ranking and a switch to PIK interest payments from cash payments, according to a report from S&P Global Ratings last month. The company has suffered from an extended decline in operating performance amid a marketwide shift to digital services in the United Kingdom and increased labor and other key input costs in the United States, the credit ratings agency said.

OSG is advised by Ropes & Gray and Evercore, and an ad hoc group of lenders is working with Paul Hastings and PJT Partners, as reported.

The company has $815 million in total debt, including a $374 million first lien term loan, $185 million 2019-A incremental term loan, $50 million GBP 2019-A incremental term loan, $75 million second lien term loan and $89 million GBP second lien term loan.

The first lien loan was quoted today at 72/75, according to a trading desk.

Output Services Group and sponsor Aquiline Capital Partners declined to comment.

--Ellen Schneider, Harvard Zhang
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