Americas Post-Reorg Weekly
Post-Reorg Weekly: Catalina, Bi-Lo, Extraction Lead Gainers; Cenveo, Appvion, Garrett Motion Lead Decliners; Hertz Expects to Emerge by End of June
Mon 06/14/2021 12:27 PM
Editor’s Note: Below is Reorg’s coverage of post-reorg equities for the week ended June 11. We provide a summary of recent events related to emergences from chapter 11, top gainers and decliners from the prior week and related analysis by Reorg professionals.
The following chart reports the week’s top gainers and losers in percentage terms of average quotes, as reported by Solve Advisors. Recent news on certain of the gainers and decliners is shown below. The price movements shown are based on an average of aggregated quotes from broker dealers, as compiled by Solve Advisors:
Last week, Extraction Oil & Gas and Bonanza Creek announced that they would acquire Crestone Peak and merge into their combined company, Civitas. The transaction between Extraction and Bonanza Creek is expected to close in the fall of this year, and the Crestone transaction is expected to close immediately after. Civitas said that it anticipates that upon closing of the merger with Crestone, it would increase its annual dividend to $1.85 per share from $1.60. On a call to discuss the merger, management said that it plans to maintain predominantly flat production, which it estimates will be achievable with a 50% reinvestment rate.
Hertz’s chapter 11 plan was confirmed last week. The company plans to emerge from chapter 11 by the end of June. The debtors chose a plan backed by Knighthead, Certares and Apollo. Under the proposed plan, existing equity would receive a combination of cash, reorganized equity and new warrants. Alternatively, equityholders may elect to receive their pro rata share of subscription rights instead of new warrants. The equity subscription rights would be part of $5.9 billion of new-money investments including $1.5 billion of new preferred equity funded by Apollo, a $2.781 billion direct investment by Knighthead and Certares and the $1.635 billion rights offering open to existing shareholders. An ad hoc second lien group objects to the plan, arguing that the plan cannot be confirmed because it fails to provide the second lien secured parties with payment in full of all postpetition interest amounts (including the postpetition PIK interest amount). The company is marketing a new $1.3 billion exit term loan.
Following a number of delays, the Fieldwood Energy debtors’ confirmation hearing is scheduled for Friday, June 18, at 10:30 a.m. ET. In connection with the fourth amended plan, first lien term loan, or FLTL, claims would purchase the reorganized equity through a credit bid plus other consideration. Aggregate consideration of approximately $1.03 billion would be paid by NewCo, a special purpose entity formed at the direction of the consenting FLTL lenders, and consist of (i) a credit bid of the allowed FLTL claims up to the FLTL claims allowed amount, (ii) up to $105 million in cash “(which may be increased to $125 million in the sole and absolute discretion of the Buyer),” (iii) the general unsecured claim, or GUC, warrants, (iv) the second lien term loan, or SLTL, warrants and (v) the assumption of certain liabilities.
Secure Home Holdings emerged from chapter 11 on Friday, June 11. Under the plan, first lien secured claims to the security and smart home automation company would receive 100% of reorganized equity, subject to dilution from a management incentive plan. A summary of the company’s capital structure upon emergence, projections and holders can be found HERE.
Reorg analyzed Global Eagle Entertainment’s capital structure, projections and holders following the credit bid by first lien lenders, the largest of which include Apollo, Eaton Vance and Mudrick Capital. The company said it expects EBITDA to improve to $169 million by 2023 from an estimated $32 million in 2020. However, the company’s 2023 estimate would be significantly higher than the reported $91 million generated in pre-pandemic 2019, driven by cost cuts and further penetration into the single-aisle, short-haul flight market.
Week Ended June 11, 2021
Post-Reorg Entities Covered This Past Week
Week’s Top Post-Reorg Intel
- Ad Hoc Trade Group Appeals District Court Decision Affirming PG&E Postpetition Interest Ruling
- McDermott CEO David Dickson to Retire Effective Immediately; BOD Member Lee McIntire Named Interim CEO
- Global Eagle Entertainment Projects EBITDA, Cash Flow to Exceed Pre-Pandemic Levels on Cost Cuts, Short-Haul Flight Adoption; Apollo, Eaton Vance, Mudrick Capital Emerge Largest Equityholders Based on Prepetition Debt Holdings
- Skillsoft Merger With Churchill Capital Expected to Close June 11
- Valaris Announces 3-Year U.S. Gulf of Mexico Contract for DS-18 Drillship; Commences in Q1'22 in 'Direct Continuation' of Current Contract
Equity Price Movers and Related News: Week Ended June 11
The following chart reports the week’s top gainers and losers in percentage terms of average quotes, as reported by Solve Advisors. Recent news on certain of the gainers and decliners is shown below. The price movements shown are based on an average of aggregated quotes from broker dealers, as compiled by Solve Advisors:
Last week, Extraction Oil & Gas and Bonanza Creek announced that they would acquire Crestone Peak and merge into their combined company, Civitas. The transaction between Extraction and Bonanza Creek is expected to close in the fall of this year, and the Crestone transaction is expected to close immediately after. Civitas said that it anticipates that upon closing of the merger with Crestone, it would increase its annual dividend to $1.85 per share from $1.60. On a call to discuss the merger, management said that it plans to maintain predominantly flat production, which it estimates will be achievable with a 50% reinvestment rate.
News on Upcoming Exits
Hertz’s chapter 11 plan was confirmed last week. The company plans to emerge from chapter 11 by the end of June. The debtors chose a plan backed by Knighthead, Certares and Apollo. Under the proposed plan, existing equity would receive a combination of cash, reorganized equity and new warrants. Alternatively, equityholders may elect to receive their pro rata share of subscription rights instead of new warrants. The equity subscription rights would be part of $5.9 billion of new-money investments including $1.5 billion of new preferred equity funded by Apollo, a $2.781 billion direct investment by Knighthead and Certares and the $1.635 billion rights offering open to existing shareholders. An ad hoc second lien group objects to the plan, arguing that the plan cannot be confirmed because it fails to provide the second lien secured parties with payment in full of all postpetition interest amounts (including the postpetition PIK interest amount). The company is marketing a new $1.3 billion exit term loan.
Upcoming Confirmation Hearings
Following a number of delays, the Fieldwood Energy debtors’ confirmation hearing is scheduled for Friday, June 18, at 10:30 a.m. ET. In connection with the fourth amended plan, first lien term loan, or FLTL, claims would purchase the reorganized equity through a credit bid plus other consideration. Aggregate consideration of approximately $1.03 billion would be paid by NewCo, a special purpose entity formed at the direction of the consenting FLTL lenders, and consist of (i) a credit bid of the allowed FLTL claims up to the FLTL claims allowed amount, (ii) up to $105 million in cash “(which may be increased to $125 million in the sole and absolute discretion of the Buyer),” (iii) the general unsecured claim, or GUC, warrants, (iv) the second lien term loan, or SLTL, warrants and (v) the assumption of certain liabilities.
Recent Effective Dates
Secure Home Holdings emerged from chapter 11 on Friday, June 11. Under the plan, first lien secured claims to the security and smart home automation company would receive 100% of reorganized equity, subject to dilution from a management incentive plan. A summary of the company’s capital structure upon emergence, projections and holders can be found HERE.
Recent Analysis
Reorg analyzed Global Eagle Entertainment’s capital structure, projections and holders following the credit bid by first lien lenders, the largest of which include Apollo, Eaton Vance and Mudrick Capital. The company said it expects EBITDA to improve to $169 million by 2023 from an estimated $32 million in 2020. However, the company’s 2023 estimate would be significantly higher than the reported $91 million generated in pre-pandemic 2019, driven by cost cuts and further penetration into the single-aisle, short-haul flight market.
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