UPDATE 1: 11:19 a.m. ET 4/9/2021: Jeffrey Jacob, partner at Marathon Asset Management, said in an emailed statement to Reorg that:
“Our capital markets team is extremely pleased to be partnering with Healogics and its equity investors to provide a constructive capital solution which provides alignment for all parties and gives the company flexibility to execute its business plan.”
Continue reading as our Americas Core Credit team analyzes and reviews the Healogics capital solution flexibility and Request a Trial for access to the linked documents as well as our analysis and reporting on hundreds of other stressed, distressed and performing credits.
--Harvard Zhang
Original Story 4:26 p.m. UTC on April 8, 2021
Healogics 2L Lenders to Own Vast Majority of New Common Shares Via Rights Offering, Equitization; 1L Lender Marathon to Receive Preferred Stock, Others to Be Cashed Out
Healogics has secured the support of the vast majority of its lenders for a debt restructuring, which includes paying off a portion of the $550 million L+425 bps first lien term loan due July with $445 million of capital via a new first lien loan and a common stock rights offering and equitizing the $250 million L+800 bps second lien term loan due July 2022, according to sources.
Unlike its peers that will be cashed out with the proceeds of a $370 million term loan committed by JPMorgan and $75 million of common stock rights offering open to all second lien lenders, Marathon Asset Management will receive $165 million of 11.5% cash/12.25% PIK preferred stock in exchange for its holdings, the sources said. The preferred stock will PIK for one year before the company has the option to either pay interest in cash or with more stock, they said.
Second lien lenders will receive 10% of new common stock in exchange for canceling their holdings, the sources said. Those participating in and backstopping the rights offering collectively will receive 90% of new Healogics common shares, they added.
The parties are targeting 100% participation for an out-of-court transaction, and if not, the company will use a prepackaged chapter 11 to facilitate the deal, the sources said.
The first lien loan was quoted today at 91/92.5 and the second lien loan was quoted at 5/8, according to Solve Advisors.
Healogics is working with Weil Gotshal and Evercore, as reported. An ad hoc group of first lien term lenders is advised by Stroock and Guggenheim Securities, and an ad hoc group of second lien term lenders is working with Ropes & Gray and GLC Advisors.
Healogics, Marathon Asset Management and JPMorgan did not immediately respond to requests for comment.
--Harvard Zhang