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August saw a wave of troubled companies turning to liability management exercises (LMEs) that favored certain existing lenders over others, a shift from the trend toward gentler transactions reported in our December LME 2.0 piece.

Six companies either closed a deal or had an ongoing restructuring during the month, while thirteen others made progress toward a possible deal. This includes a €112m bridge loan Kloeckner Pentaplast secured from its creditors in support of ongoing negotiations and the implementation of a wider restructuring.

Among those companies that closed transactions, nearly all conducted a non-pro rata, uptier LME.

Source: 9fin analysis

The easy money era has spawned a wave of LMEs as companies exploit loose credit documentations to extend their runways, often at the expense of its creditors. But after signs of easing late last year, the coercive approach appeared to have regained traction in August.

The aggressive move was apparent in Quest Software and Saks Global’s final LME phases. The two private equity-backed companies conducted multi-stage LMEs, according to restructuring data tracked by 9fin, with the initial step producing up to five distinct tiers apiece. In spite of offering lenders varying exchange terms, Saks, for instance, still netted 98% support.

City Brewing closed a deal that handed over control to a group of existing creditors after reaching an agreement with the majority of the company’s first and second-lien lenders. The data also showed that Ares-backed Guitar Center closed a maturity-extension deal with an ad hoc lender group, and AI chatbot provider LivePerson did a private exchange of unsecured notes for a combination of equity and new secured debt.

Zayo has entered into a transaction support agreement with most of its existing lenders to extend maturities to 2030 through a series of debt exchanges.

Source: 9fin analysis

Meanwhile, some companies have yet to launch any restructurings but showed signs that are often considered a prelude to an LME.

Lenders to KIK Consumer Products, Cumulus Media, and nine other companies have hired restructuring advisors, with Gibson Dunn involved in at least four of the situations.

Similarly, Summit Behavioral Healthcare could soon have a deal, having reached an agreement with the majority group of lenders working with Milbank. The Patient Square-backed addiction treatment center reported a second-quarter earnings growth amid plans to launch a new money pro rata deal that will create superpriority debt and push out maturities to 2030.