The RSA signatories lead the ad hoc group of lenders holding 82% of the first lien term loans, 84% of the 1.5L notes and 74% of the 2L notes. The DIP lenders include OCO Capital Partners ($7m) and certain prepetition 1L lenders ($63m), which debt will then convert into a $56.1m first out exit term loan, while this group and other first lien lenders will also convert the entirety of their first lien loans at par into $246.7m of second out exit term loans.

CURO, an omni-channel consumer finance company, operates in both the US and Canada. According to the first-day declaration by Douglas Clark, the CEO and a member of the board of directors of CURO, the company has spent the last couple of years dedicating significant financial and operational resources to maximize operational efficiencies and strengthen its liquidity. As described by Clark, these actions included bringing in a new c-suite team, acquiring businesses while also selling other of its businesses, as well as closing a debt transaction. In addition, the company tried to refinance its securitization facilities in 2023, which ultimately was not successful. Despite these actions, the company ended up electing to not make interest payments that were due for two debt tranches on 1 February 2024, and began exploring various financing alternatives, according to Clark.

This prepackaged case was the result of that exploration — the company was able to negotiate with its prepetition creditors and ultimately bring a fully consensual deal to the bankruptcy court for approval. The plan will significantly deleverage the company by reinstating certain of the senior prepetition debt, as well as equitizing other debt, as well as provide a pathway to refinance the securitization facilities, according to Clark.

The company will appear before Judge Isgur again tomorrow (27 March) at 5pm CT to address outstanding relief requested in its motion to schedule a hearing for approval of the disclosure statement and plan confirmation. When scheduling the continuation of the first-day hearing to 27 March, Judge Isgur noted that his afternoon on the 27th was busy with an expected new complex case filing, so the earliest he anticipated being available was at 5pm CT.

The docket can be found here.

Prepetition Capital Structure

Transactions under the RSA

• DIP Facility:$70m superpriority senior secured DIP credit facility$25m upon interim approval$25m upon final approval as a second drawAdditional $20m upon final approval and subject to the consent of the required DIP lenders, which can be drawn in two drawings of $10m eachBorrower/Guarantors: CURO Group Holdings as borrower and all other debtors as guarantorsInterest: SOFR (2.5% floor) + 10% PIKMaturity: 6 months from petition dateCollateral: Consensual priming liensFeesBackstop premium: 5% of initial backstop commitments payable only to backstop commitment partiesfully earned upon entry of interim orderif plan is consummated, paid in equity at a 25% discount to the implied equity value provided by the plan upon effectiveness and otherwise in cash upon payment in full of the DIP claimsUpfront fee: 3% of amounts drawn under the DIP facility, payable in kind, and payable to all DIP lendersExit fee: 10% of aggregate principal amount of DIP facilityIf plan is consummated and DIP Loans converted, 5% PIK as additional takeback term loans and 5% payable in equity of reorganized company at a 25% discount to implied plan equity valueotherwise, payable in cash upon satisfaction in full of the DIP claimsLenders benefit from customary adequate protection
• Exit Facilities  $56m new first out loansAmount of outstanding principal and accrued and unpaid interest and fees payable under the DIP facility as of the Effective DateMaturity: 4 years from Effective DateInterest: SOFR (2.5% floor) + 10% per annum (100% PIK during year one, at least 75% PIK during year two and at least 50% PIK for remainder)$247m new second out loansInitial principal amount will be the amount of outstanding principal and accrued and unpaid interest (including default interest) and fees under credit agreement as of the Effective DateMaturity: 4 years after Effective DateInterest: 12% per annum (100% PIK during year one, at least 75% PIK during year two and at least 50% PIK thereafter)
• GovernanceMIP: up to 10% of new equity interests on a full-diluted basisThe new board shall have two directors appointed by Oaktree Capital Management, one director selected by Caspian Capital and Empyrean Capital, one director appointed by OCO Capital Partners, one independent director agreed upon by consenting 1.5L noteholders excluding Oaktree, Caspian, Empyrean and OCO, the CEO and one additional independent director, whose seat will be filled by a customary majority vote of the equityholders
• Releases: Customary releases and exculpation provisions

Key recoveries and distributions

• DIP claims: (i) the principal amount of and accrued but unpaid interest on the DIP term loans converted on a dollar-for-dollar basis into first out exit loans; (ii) a pro rata portion of the DIP exit fee; and (iii) DIP backstop commitment parties will receive their pro rata portion of the DIP backstop commitment fee
• Prepetition 1L term loan claims: pro rata portion of the second out exit term loans
• Prepetition 1.5L notes claims: (i) 100% of new equity, less the prepetition 2L notes distribution and DIP equity fees, subject to dilution by the new warrants and the MIP
• Prepetition 2L notes claims: new equity equal to 10% of outstanding new equity interests as of and after giving effect to the effective date, subject to dilution by the new warrants and the MIP, along with new warrants
• Securitization facilities claims: to be reinstated, paid in full or other agreed upon treatment
• Existing CURO interests: pro rata share of contingent value rights (CVR)

Key documents

• Petition
• First day declaration of Douglas Clark, CEO and member of the board of directors of CURO — prepetition capital structure on PDF pg. 9, RSA on pg. 59, and organizational structure on pg. 279
• DIP financing motion — DIP budget on pg. 129Declaration in support of by Joe Stone, managing director and co-head of debt advisory and restructuring group at Oppenheimer & Co, Inc.
• Plan
• Disclosure Statement — New first out/second out term sheet on PDF pg. 311, CVR and warrant term sheet pg. 316, financial projections pg. 332, valuation analysis pg. 343, and liquidation analysis pg. 347

Key milestones

• March 25 — Petition Date
• March 26 — Deadline to file plan and disclosure statement
• March 28 — Entry of interim DIP order and interim securitization order
• May 9 — Entry of final DIP order and final securitization order
• May 14 — Entry of confirmation order
• July 23 — Effective Date

Advisors

• Company: Akin Gump as legal advisor, Cassels Brock & Blackwell as Canadian counsel and Oppenheimer & Co as investment banker.
• Ad Hoc Group: Wachtell Lipton Rosen & Katz, Vinson & Elkins as local counsel; Houlihan Lokey as financial advisor and EY as a consultant. Wachtell also represents Alter Domus in its capacity as prepetition agent and DIP agent.
• US Bank: Barnes & Thornburg
• Argent Institutional Trust Co (fka TMI Trust Co): Foley & Lardner

Current organizational structure