Chapter 11 Filing Activity for March 2021

Chapter 11 Filing Activity for March 2021

Written by Ian Howland, Research and Data Analyst, First Day || After a tepid start for chapter 11 filing activity during the first two months of 2021, spring has sprung some liveliness filing activity, as March's count rose to 34, representing a 36% increase from February's level and and a 79% increase from January, which was one of our slowest months on record. With one day left in the month, March’s numbers are down 5.6% from March 2020 and 12.8% from March 2019. While January and February captured low filing counts by month-end across all sectors this year, they resembled some of 2020’s busiest months with respect to consumer discretionary and real estate filings, which represented a combined 64% of all chapter 11's over the same period. Not only did the filing frequency increase significantly in March, the month’s filing set is also much more diverse, led by the communication services and real estate sectors with six cases each, followed by consumer discretionary with five, financials with four and each of the energy, healthcare and utilities sectors with three. || Sign up for our weekly updates here.
Actico Sale Process Based on 2021 EBITDA

Actico Sale Process Based on 2021 EBITDA

Working with Raymond James as their financial advisor and a group of potential buyers, the Actico sale process is underway. With a projected EBITDA of €10M, Actico, who’s name was changed from Bosch Financial Software in 2015, could reach a potential valuation of €180M for the sale. The sale is expected to be supported by debt and with only minimal competition in the financial automation software sector it is attracting sponsors who are expected to carry out the due diligence. Also making this sale attractive to sponsors is the company’s consistent growth. Actico expects another 11% year-over-year growth for 2020, but with the impact of the coronavirus pandemic in the second and fourth quarters of 2020, there was a temporary weakening of business. Click through to read our full analysis of the situation as well as a full year, 2019 financial report for Actico: https://reorg.com/actico-sale-attracts-sponsors/ 

Americas Podcast: YPF State of Play After Liability Management Exercise

Featuring a discussion on a force majeure dispute following the Texas winter storm, CBL Property’s amended RSA, Seadrill Partners’ disclosure statement approval and a deep dive into Argentine oil company YPF’s state of play after their liability management exercise, our Americas Core Credit weekly podcast breaks down the most important stories from the week of March 22nd, 2021.  In terms of the force majeure dispute following Texas winter storm Uri, our team discussed the applicability of these clauses in power hedging agreements and how they could dictate legal strategies taken by Texas electricity generation projects facing high bills from financial institution hedge counterparties. Our team takes a look specifically at Canadian Breaks, a large wind farm in the Texas panhandle, after they filed a petition against J.P. Morgan when the bank presented the wind farm with a $79M bill for power purchased during the storm.  On CBL Properties, our experts discuss the debtors filing of an amended restructuring support agreement which resolved their disputes with prepetition lenders and agent Wells Fargo paving the way for a potentially consensual restructuring of the mall REIT’s funded debt. Discussing Seadrill Partners, our team broke down the disclosure statement as well as Judge David Jones’ approval of this statement on a conditional basis after counsel announced significant progress on a global settlement with Seadrill Limited.   Finally, Kyle Owusu, Director of Emerging Markets Credit, took a deep dive into Argentine oil company YPF and their current state of play after their liability management exercise. The company’s new 2029 and 2033 bonds, which were issued as part of the company’s February liability management exercise, are being offered at around 58, 50, and 48 respectively according to advisers. Click through to listen to the full episode on Spotify, Soundcloud or Apple Podcasts.
Chinese high-yield issuers at odds with credit rating agencies

Chinese high-yield issuers at odds with credit rating agencies

Written by Shasha Dai, Managing Editor, China || You are ready to put your house on the market but don’t see eye to eye with the appraiser on the value of your property - or worse yet, you couldn’t afford an appraisal report. This is the same situation many Chinese high-yield issuers find themselves these days. At a time when they need to tap the bond market for fresh capital to refinance existing debt, they are at odds with credit rating agencies over their rating methodology or have had their ratings withdrawn for unspecified commercial reasons. Yunnan Provincial Investment Group, or YPIG, said it has been working with Moody’s as its new rating provider since Fitch downgraded and subsequently withdrew ratings of YPIG citing “commercial reasons.” Chongqing Energy Investment Group also saw its ratings withdrawn by Fitch, after it ceased participating in the rating process, according to Fitch. Risesun Properties Group said it requested S&P withdraw its rating because it did not reflective of the company’s fundamentals. The withdrawal also helps lower its operating cost, said Risesun. || Sign up for our weekly updates here.
Permira Debt Managers to Exit Davies Group

Permira Debt Managers to Exit Davies Group

The U.K.-based Davies Group provides professional services and technology solutions, including claims, underwriting, distribution, regulation, customer experience, human capital, digital transformation and change management for the insurance industry. Reorg's EMEA Middle Market team reported in mid-March that the Davies Group’s incumbent lender Permira Debt Managers is exiting its position amid BC Partners’ acquisition of the company, sources told Reorg. Blackstone Credit provided a £950 million debt package to support the transaction. Permira Debt Managers did not participate in the acquisition financing but is getting repaid, sources said. Click through to read the most recent update.
Lycra’s Bondholder Group Looking for More Transparency in Ruyi-Huayang Joint Venture

Lycra’s Bondholder Group Looking for More Transparency in Ruyi-Huayang Joint Venture

After a joint venture between Shandong Ruyi Technology Group and Huayang New Material Technology Group, a group of Lycra bondholders are looking for more clarity due to the suspected use of Lycra’s intellectual property and potential technology transfer for a construction project between Ruyi and Huayang. Lycra suspects that their branding and technology is going to be leveraged for the project without authorization. These complications came after Huayang and Ruyi signed a framework agreement to institute fiber material manufacturing facilities including one for Lycra that could produce 60,000 tonnes of spandex per year by December 2021.  Additionally, as part of the deal between Ruyi and Huayang, Lycra was aimed to be listed on China’s STAR board if Huayang provided RMB 2.5 billion to Ruyi in exchange for an equity interest in the U.S. spandex company as well as RMB 3 billion worth of intellectual property rights and RMB 7 billion worth of offtake contracts. The bondholder group at Lycra were alerted that Ruyi had received part of the RMB 2.5 billion proceeds giving them reason to believe that intellectual properties had been sold by its Chinese parent. Ruyi also recently told some Lycra bondholders that they are looking to float Lycra on the Hong Kong stock exchange instead of the Shanghai tech board, but bondholders are skeptical that this will ever happen. Read our full analysis of the Lycra bondholder group situation here: https://reorg.com/lycras-ad-hoc-bondholder-group-seeks-clarity-on-ruyi-huayang-joint-venture/
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