Concordia Bus creditors are hammering out the final terms of a recapitalisation to save the Goldman Sachs buyout. Goldman Private Equity and existing shareholder Schoyen Group have had most of their equity investment wiped out since the company tapped the high-yield bond market for a senior debt financing last year.
A group of distressed-debt investors that bought up the 11% senior subordinated notes are expected to own 96% of the company’s equity post-restructuring. An ad-hoc committee of those bondholders has developed a restructuring proposal to inject €40m of new equity into the issuer of the senior debt (Nordic) in a bid to get senior lender approval for the deal.
The deal would leave equity sponsors Goldman and Schøyen with only 4% of the emerging share capital. This will be split according to their existing holdings – in a 51:49 ratio.
If successful, the template will be replicated in the expected wave of publicly financed LBO fall-outs. “Talks are still progressing and we hope a deal will be struck this week,” said one person involved. “The sponsors have been fairly treated, and helpful and supportive of the process. We think it will set an example for a good LBO restructuring.”
However, the company is said to be losing patience with the protracted nature of the whole process. Subordinated bondholders are also said to be increasingly frustrated by the demands of the senior bondholders.
Subordinated bondholders have threatened the seniors with a “scorched earth” scenario of triggering a default, allowing the subordinated lenders to take out the seniors at par. “The restructuring will go ahead with or without the seniors’ consent, but it would be good if we had their consent,” said one person involved.