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Platinum Equity’s latest buyout fund has attracted $12.5bn of investor interest, making it already the biggest ever for the Los Angeles-based private equity firm, as 9finreported exclusively this week.
That outpaces the $10bn the firm raised for its last such vehicle in early 2020. More than that, it solidifies the sentiment that ultimately, there are very few consequences for private equity sponsors who are willing to be aggressive with the lenders to their companies.
It’s no secret that Platinum Equity companies are known by debt investors to come with significant risk of what many lenders see as aggressive use of leverage and financial engineering, often advised by Milbank and PJT Partners.
For starters, inYak Access (fund IV), lenders took a haircut last year in an out-of-court debt restructuring. Platinum put in more money to stay in control and then lined up the $1.1bn sale to United Rentalsannounced this week.
Platinum’s medical diagnostics company LifeScan(fund IV) did a distressed exchange less than a year ago. Platinum’s equity investment in textile company Elevate Textiles (fund IV) was wiped out in the out-of-court debt-for-equity swap last year.
Last year Platinum struck a deal where it committed additional capital to prison phone company Aventiv Technologies (formerly Securus, fund IV), which towards the end of 2023 launched another deal to push out maturities. Lenders are also poised to take control of Platinum’s pet products business Petmate.
None of that compares with the epic battle being waged over what Platinum orchestrated with aerospace parts roll-up Incora, to try and keep its equity option alive and uptier its own debt holdings.
Platinum’s equity investment as well as the bonds that it uptiered are getting completely wiped out as part of that bankruptcy, and it’s still to be determined whether or not Platinum has even more liability for the role it played in orchestrating the transaction. Some claims targeting Platinum have made it past the motion to dismiss stage, and are part of the fierce legal battle over liability management deals.
Potential upcoming scenarios include United Site Services, where Platinum sold its own portable toilet services company to itself in 2021. Creditors have now organized as the credit has deteriorated, as 9fin reported.
Creditors have also organized defensively in PR software firm Cision(fund V). Sewing machine maker SVP Worldwide (fund V) was downgraded in February by S&P on a high likelihood of default. Another name on the radar for even an opportunistic debt deal would be AC Products (Cabinetworks), which sources note is another company where Platinum owns the stressed junior debt.
No matter the length of the list of challenging deals where a private equity sponsor is willing to get aggressive, $12.5bn speaks for itself. Enough LPs remain willing to invest if there has been a record of returns, and lenders appear willing enough to fund deals without much or any premium relative to other sponsors.
People Moves
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Rick Press, who was a partner at Apollo, has joinedLatham & Watkins to advise on M&A and corporate transactions. Clifford Chance has hired Brian J. Lohan and Maja Zerjal Fink for its global restructuring and insolvency team in New York.
Robertshaw — Invesco has accused Robertshaw’slenders and its financial sponsor of attempting to “weaponize the bankruptcy process” by using a DIP financing proposal to legitimize a disputed pre-petition transaction.
Cumulus Media — Creditors organized and hired advisors in response to what lenders are calling an “aggressive” exchange offer. The company announced the exchange on 27 February. 9fin reported exclusively on the legal advisor used by the company to launch the deal.
Platinum Equity — The private equity firm, led by billionaire Tom Gores, has amassed $12.5bn so far for its latest buyout fund. It is also looking to raise a new vehicle focused on higher-yielding credit investments in middle-market companies.
Spirit Airlines — The low cost carrier has hiredPerella Weinberg and Davis Polk to advise on debt refinancing options, after the termination of its proposed merger with JetBlue Airways. Meanwhile, a group of convertible bondholders organized with King & Spalding and Ducera.
GrafTech — The graphite electrodes producer tapped Evercore and Kirkland & Ellis to explore options, as it navigates a challenging outlook due to soft demand and pricing pressures.
Steward Health Care — The troubled hospital operator’s “six-point action plan” came amid a backdrop of increasing tensions with the state of Massachusetts and a scramble among restructuring advisors to manage its financial chaos.
SI Group — The chemical additives company recentlyshared preliminary 2023 results, which left some investors questioning the sustainability of its capital structure, even as its business shows signs of recovering.
Equinox — The luxury fitness chain has lined up roughly $1.8bn in new money led by Sixth Street and Silver Lake to refinance its debt wall and fund its growth. Other investors include Ares Management, HPS Investment Partners, L Catterton, and the principals of the Related Companies, according to a company statement.
The RealReal — Warrants offered by luxury goods reselleras part of a debt exchange unveiled last week are in-the-money after the company’s Q4 23 earnings print sent the stock surging.
Russell Investments — The investment services firm owned by private equity firms TA Associates and Reverence Capital Partners, has a deal in the works to address its upcoming 2025 term loan maturity, 9fin reported.
Cano Health — The bankruptcy court this week passed a final order authorizing the $150m DIP. The de-SPACed healthcare services provider had filed for bankruptcy with a restructuring support agreement from holders of around 86% of its secured debt and 92% of the senior notes.
Emergent BioSolutions — The life sciences company disclosed a forbearance agreement with its secured lenders through 30 April 2024 as newly appointed CEO Joseph Papa takes the reigns amid an effort to stabilize the business and address the capital structure.
Gol — Competitor Azul SA denied recent reports that it was considering purchasing the bankrupt Brazilian airline. Meanwhile, Gol declared that it will evaluate all recapitalization or other transactions, including to raise capital. Last week, the bankruptcy court passed a final order authorizing DIP financing of up to $1bn after the company allowed objecting lenders to provide an incremental $50m over the $950m initially proposed.
Charge Enterprises — The electric vehicle charging company filed for Chapter 11 before the U.S. Bankruptcy Court for the District of Delaware. It had previously inked a restructuring support agreement with Arena, its sole holder of funded debt, which intends to provide a $10m DIP facility and equitize prepetition debt.
Jo-Ann Stores — The arts and crafts retailer is negotiating bankruptcy financing as it prepares for Chapter 11.
Other active distressed and restructuring coverage
Apex Tool Group — The Bain-backed company clinched approval from more than 91% of first lien lenders to participate in a proposed exchange offer by a 27 February deadline.
Incora — 9fin continues to cover the ins and outs of the Incora adversary trial.
Enviva — The wood pellet producer is considering a debtor-in-possession financing proposal put forth by an unsecured bondholder group led by Ares.
Medical Properties Trust — The REIT’s losses deepened as it wrote down its investments in distressed tenant Steward Health Care and disclosed bridge financing for Steward. The 10-K filed for 2023 was missing a routine certificate of consent from PwC, its auditor, and disclosed an exchange with the SEC on the disclosure of financial statements for Steward.
Thrasio— The Amazon aggregator filed for bankruptcy following stalled demand growth and liquidity pressure post the pandemic-fueled e-commerce boom. The bankruptcy court provided interim approval for the $360m DIP facility.
Sonrava Health (fka Western Dental) — The New Mountain-backed company is sounding out investor interest on new funding backed by its accounts receivables balance.
Staples — The Sycamore Partners-backed company’s bonds popped on encouraging Q423 guidance, boosting investor confidence on its refinancing prospects.
SIRVA — The outsourced moving services provider has engaged advisors to explore options as it deals with a heavy debt burden and weak performance.
Jo-Ann Stores — The arts and crafts retailer’s talks with existing lenders on additional funds may become challenging because of restrictions in its ABL agreement. It was more recently reported to be planning for an imminent bankruptcy filing.
Astound Broadband — The company hired advisors to engage with lenders on inbound liability management proposals.
Belk — Lenders to the department store chain have been speaking with the company about a restructuring that could result in an exchange of much of its debt into equity.
DISH — The telecom company is sounding out interest from third party investors on financing proposals, after nixing two proposed exchange offers. This is heightening tension in the situation, as existing creditors have already been roiled by the company’s aggressive financing maneuvers.
Hearthside Food Solutions — A group of lenders signed a cooperation agreement to bind themselves in looming debt talks with the US food maker.
Lumen — The telecom company’s proposed restructuring with an improved transaction support agreement would address the bulk of 2025 maturities, largely extend maturities of debt at Lumen and Level 3 through at least 2029, and help shore up liquidity.
Office Properties Income Trust — The office REIT continues to evaluate raising debt against its over $3bn of unencumbered assets.
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
Veritas Technology— Creditors are puzzled by the status of their debt holdings after the Carlyle-backed company announced a deal where data safety company Cohesity would buy and merge with Veritas’ data protection business.
Workhorse — The electric vehicle company is working with Stifel to help raise bridge financing as it combats cash flow pressures.
Xplore — Advisors to Xplore and a group of lenders are discussing options to recapitalize the business.
