Target nation: Lithuania
Sponsor: MidEuropa Partners
Lithuania-based mobile operator Bite bought back 95% of a €110m tranche of senior subordinated notes due 2017, after it completed a tender offer to buy back the notes at 32% of face value, including a 3% early tender fee on February 18. The same notes had traded in the mid-teens prior to the tender offer. The offer was conditional on 90% acceptance. The debt purchase was paid for through an equity injection from Bite’s sponsor MidEuropa Partners. Deutsche Bank acted as agent. Fitch downgraded Bite’s issuer default rating to C from CCC when the offer launched, saying the offer to buy back debt below par constitutes a distressed debt exchange, rather than a simple buyback, because the rating agency saw the transaction as necessary for the business, rather than entirely voluntary. Bite had €190m of senior secured notes outstanding, plus €110m of subordinated notes outstanding prior to the buyback.
Target nation: UK
Sponsor: Oaktree Capital
A consortium led by distressed debt investor Oaktree Capital has moved closer to finalising a debt-for-equity takeover of UK estate agent Countrywide, with the announcement that the consortium has the backing of noteholders representing 78% of the total outstanding senior secured notes and about 83% of the total outstanding senior notes.
The noteholder group required the backing of 75% of senior note holders in order to initiate a court-sanctioned scheme of arrangement to execute the proposed debt-for-equity swap. Senior floating rate notes traded at 34/36 last week, as the final numbers backing the deal lined up.
A consortium comprising incumbent-sponsor Apollo alongside new investors Oaktree, Alchemy Special Opportunities and hedge fund Polygon are behind the bid and have proposed a debt-for-equity swap that would leave them with 60% of a hugely deleveraged business. If successful, the move will be the first time distressed investors have taken control of a European company through the acquisition of discounted debt in the present downturn.
The proposed debt-for-equity deal involves a £75m cash injection that sees Countrywide’s debt cut by 75%, from £740m to £175m. Senior bondholders are being offered a 35% equity stake to back the deal, plus all of the new debt. Junior bondholders are being offered 5% of equity while Apollo and new investors would take the remaining stake.
Target nation: Netherlands
Sponsors: Bain Capital and Apax Partners
The early tender date for NXP Semiconductors’ exchange offer to bondholders was extended to March 23, after just 10% of noteholders tendered to exchange their bonds by the original early tender date of March 16.
The exchange offer is an effort to migrate existing noteholders into a smaller tranche of super-priority notes. Objectors claim that the deal primes subordinated bondholders at the expense of senior secured creditors.
The deal does not require bondholder consent to go through, but the company is hoping to use the exchange offer to lower its leverage. An acceptance level that is too low could mean the impact of the exchange offer is too insignificant to produce a material reduction in indebtedness.
The take-up of the offer ranged from just under 20% of the 9-1/2% 2013 US dollar notes to as little as 1.85% of the 7-7/8% senior secured US dollar notes.
The company has said it will press on with the offer and there appears to be little scope to make changes to the offer itself. A maximum of €250m of new notes can be created under the company’s credit agreements, so any increase to the value of old notes versus new notes being created would come at the expense of the amount of debt exchanged – undermining the point of the exercise.
JP Morgan, Lazard and Morgan Stanley are advising NXP. Law firm Cadwalader is advising a group of senior secured noteholders opposed to the deal.
Target nation: Germany
Sponsors: KKR and Permira
KKR and Permira have recruited Houlihan Lokey to advise it on the restructuring of German pay-per-view TV broadcaster ProSiebenSat.1.
The sponsors are looking to reorganise the holding company-level debt in anticipation of a potential drying-up of funds moving up from the operational company level, as revenues decline at the loss-making broadcaster.
Debt at the operational company (opco) level was €3.4bn at the end of 2008, compared with holding company debt of around €1.8bn.
Restructuring advisors and lawyers are now moving to put together a creditor group. A number of sources say they will focus that effort on opco-level creditors who are closer to the underlying assets.
The deal was syndicated in June 2007, at the top of the leveraged credit boom, to a group heavily weighted towards institutional investors. Sources say distressed investors have been buying into opco B&C tranches of the debt, which trades in the mid 60s. However, the initiative for now remains with the sponsors at the holdco level, especially if they are willing or able to inject new cash.
Target nation: Sweden
Swedish bathroom-products maker Sanitec has agreed an extension to its standstill agreement with senior lenders. The standstill now runs until April 30. The company has been in talks with lenders since December. It breached loan covenants at the end of 2008 but has so far held off its mainly Nordic lenders from enforcing their security, despite failing to agree a restructuring.
EQT has proposed injecting new capital into the business in a deal that would see second-lien lenders wiped out and senior debt reduced from €850m to €350m in exchange for €100m in new money invested in the form of a subordinated loan. But the proposal has failed to win the necessary backing to proceed.
According to the company, Sanitec’s operations continue to be profitable. In 2008 it recorded preliminary recurring Ebitda of more than €100m on sales of about €880m.
Target nation: Netherlands
Sponsor: Bain Capital
Sensata Technologies has launched a modified Dutch auction to buy back US$50m of high-yield bonds in an effort to deleverage its business.
Sensata is a Netherlands-headquartered manufacturer of high-tech sensors and controls owned by financial sponsor Bain Capital. Goldman Sachs is mandated as dealer-manager.
The company has set a base price of 30% of face value for the auction to buy back US$40m worth of its outstanding 8% senior US dollar notes due 2014, with investors invited to submit tenders at a premium of 5%–7% over the base price.
The second offer is to spend US$10m equivalent to buy back its outstanding 9% senior subordinated euro notes due 2016 and its 11.25% senior subordinated euro notes due 2014.
The company has set a base price of 16.55% of face value for the euro 2016 notes, with investors invited to tender at a premium of between 0% and 4% and a base price of 18% for the 2014 notes, again inviting tenders at a premium of 0% to 4%.
A participation payment of 3% is included in the base price, but will be deducted for any accepted tender submitted after the early participation date of March 16. The tender period runs until March 30.
Bain bought Sensata in 2006.
Target nation: France
Sponsor: LBO France
LBO France is planning a €70m cash injection into French builders’ merchant Terreal. The new capital would take the form of a senior loan to sit pari passu with an existing all senior debt structure. In exchange lenders would be kept whole but see part of their existing facilities subordinated below the current all senior tranche, albeit with an increased coupon.
The company agreed a standstill with banks in 2008, and have rolled over a drawn revolver since then. While talks have now been proceeding for a number of months there is no imminent liquidity concern.
Target nation: UK
Sponsor TPG has secured creditor backing for a revised restructuring proposal for speciality chemicals maker Vita (formerly British Vita). A spokesman for the company said 81% of senior lenders and more than 90% of mezzanine lenders have backed the revised deal.
The company had needed the backing of 75% of creditors to initiate a court sanctioned scheme of arrangement to execute the debt for equity swap.
TPG made an initial restructuring offer in February, which was rejected by creditors as too favourable to the sponsor. The main change in the revised proposal is an offer to increase the amount of equity senior holders will hold post restructuring from 32.5% to 37.5%.
Mezzanine holders will own 2.5% of equity plus warrants under the deal, with the sponsor’s equity reduced from the previously proposed 65% to 60%.
The core of the restructuring remains centred on an equity injection from the sponsor (€40m) and mezzanine lenders (€20m) and agreement from lenders to write down debt from €633m to just over €100m. As well as new equity, the restructuring features a €35m super senior revolver to be provided by senior lenders.
TPG’s initial proposal was tabled in late February and the revised deal is expected to be finalised in April. An extension to an existing standstill agreement has been approved until the end of May 2009.
TPG said it would continue to inject funds to keep the company on a strong and secure financial footing until the scheme became effective.
Lazard advised the company on the deal.