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Of note this week was the evolution in the two major telecom debt negotiations for DISH Network/Echostar and CommScope. With DISH, it’s the start of a chess match between what 9fin reported as potentially the largest co-op group in history and DISH/Echostar Chairman Charlie Ergen.
“It was amazing how quickly they were able to organize that many bondholders that quickly,” commented one bondholder.
Bondholders organized with Milbank and Lazard initially fought off the aggressive exchange proposal lobbed in on 16 January. But then picking up on the theme of exclusion from last week’s Default Notice, the group promptly closed to new members after an initial deadline.
The problem for holders of DISH’s DBS bonds remains that DISH moved spectrum and subscriber assets away from DISH DBS creditors and into a newly formed subsidiary of EchoStar. The group is threatening claims of fraudulent conveyance - a notoriously difficult claim to win on - as well as breaches under the covenants and potentially an insolvency claim.
One observer noted a parallel between the removal of the subscribers from the DISH DBS box to the famous maneuvers orchestrated by the old Caesars Entertainment before it filed for bankruptcy. In that case, prior to its 2017 bankruptcy, a then Apollo-backed Caesars removed its Total Rewards intellectual property - a sophisticated system of tracking and micro-targeting customers integral to the casino business - out of the Caesars operating company for no valuation.
That egg ultimately became unscrambled after an epic fight with creditors in bankruptcy court.
9fin also reported this week on developments with network infrastructure company CommScope. Our legal team provided QuickTakes on the loans and bonds, which analyzed secured debt capacity under the debt instruments, which creditors expect the company will exploit in order to address its capital structure.
A group of 2025 bondholders are hoping that the company deals with that near-term maturity first, as Commscope sponsor Carlyle believes the business will recover sooner than the market is anticipating and may be in a better position to address further-dated maturities later on.
DISH - - 9fin this week reported on the unprecedented size of the co-op group that organized in order to oppose Ergen’s aggressive maneuvers to begin deleveraging DISH DBS, as well as some of the group dynamics that are evolving as creditors prepare for a long and contentious process.
AccentCare – Lenders have until today (2 February) to decide if they want to join the Advent International-backed home health company’s proposed debt extension plan, or potentially become last in the repayment line. We reported earlier that the company had hired Evercore to advise on negotiations with creditors in light of ongoing cash burn and a 2026 debt maturity. A group of lenders had previously organized with Gibson Dunn and Centerview Partners.
CommScope – A group of secured lenders recently offered new money as the struggling telecommunications infrastructure company has more than $1.2bn of debt coming due in 2025.
Cornerstone Chemicals– The melamine producer has inked an out-of-court deal, in which a group of secured bondholders took control and LittleJohn kept a slice of equity.
Hearthside Food Solutions – A group of lenders recently signed a cooperation agreement to ally themselves in looming debt talks with the US food packaging company. Creditors are bracing for a difficult refinancing as Hearthside’s earnings deteriorated last year amid news on employing underage migrant workers.
Sonrava Health – The New Mountain-backed dental company tappedGreenhill to help with liquidity strains, while some lenders organized with Paul Hastings.
Xplore – Advisors to Xplore and a group of lenders are discussing options to recapitalize the business. The Canadian broadband provider recently dropped its fiber assets into an unrestricted subsidiary, typically a prelude to a financing deal.
Office Properties Income Trust – The office REIT has replaced its $700m unsecured revolver with a $325m secured revolver and $100m of term loans due 2027. It is also working with Moelis and Wachtell to address its other near-term maturities. We had reported earlier that the company is working with B. Riley to raise roughly $1bn in secured debt financing in order to address bonds coming due over the next 13 months.
Allen Media – The media company designated several subsidiaries – holding equipment that is claimed by the company to have zero market value – as unrestricted. The proceeds from the sale of some equipment will be housed in the restricted box and reinvested in the business. Separately, the company made a widely reported bid to acquire Paramount. Its senior notes have been trading at distressed levels for a while.
Incora – The trial over the controversial LMEs in Incora continued this week with Judge Isgur hearing expert testimony and addressing some issues with potential conflicts of interest. The colloquy would suggest the judge pushing parties towards a settlement - though there’s no indication parties are engaging outside of a courtroom.
Other active distressed and restructuring coverage
Astound Broadband– The company hired advisors to engage with lenders on inbound liability management proposals.
Carestream – Lenders organized ahead of the dental company’s debt wall.
Enviva – The troubled wood pellet producer is entertaining proposals for a loan to fund operations through a possible bankruptcy. An out-of-court process remains the priority.
SI Group – A majority group of term loan lenders to the SK Capital-backed chemical additives manufacturer formed an exclusionary co-op agreement.
Steward Health Care – The hospital operator has engaged a financial advisor to explore strategic options, as the company struggled to pay outstanding rent and loans to its landlord Medical Properties Trust.
Spirit Airlines – On 16 January, a federal judge ruled to block JetBlue's proposed acquisition of Spirit, and distressed investors have been analyzing the recoveries to jump into the now more deeply distressed bonds.
Cano Health – 9finreported Cano is in advanced talks focused on heightened funding needs.
Diamond Sports Group– The restructuring support agreement involving an investment from Amazon and a settlement with parent Sinclair still has a ways to go, as the debtors negotiate with various sports teams on being part of their offering.
Audacy – The pre-packaged bankruptcy in Houston remains on track, in a plan that would reduce its debt load from $1.9bn to $350m by converting much of it to equity.
Signature Bank– Distressed investors have been buying up debt issued by banking crisis casualty Signature Bank, with some managing to turn a profit on the trade.
United Site Services– Certain lenders to United Site Services have banded together, as the portable toilet rental company battles weaker earnings amid an inflationary and higher rate environment
First Quantum Minerals–Bonds shot up earlier this year after a report that Barrick Gold held talks with some of the copper miner’s largest investors to gauge support for a potential takeover.
