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Welcome to 9fin’s weekly newsletter dedicated to US distressed debt, restructuring and special situations news and developments. Check out what else we do for distressed and restructuring here.

It seems it’s become standard practice to include a payment-in-kind feature as part of a solution in liability management exercises — there are several such amendments in the works right now for stressed or distressed companies. It decreases the amount of cash outlay in the near-term and pushes off a reckoning to some far-off time when the company will have (supposedly?) weathered its current struggles.

Here is a brief list of some recent-ish examples:

P&L Development completed an exchange offer targeting $350m in principal amount of P&L’s secured notes, to exchange into notes due 2029 temporarily paid in kind with a toggle 12% coupon.

STG Logistics completed a transaction, with the support of a subset of existing lenders, which involved a drop-down transaction, new debt capital, and exchange debt issued out of a new unrestricted subsidiary, and each tranche will have partial PIK features.

Global Medical Response’s amend-and-extend of its roughly $4bn of loans ($1.9bn of CLO exposure) affected CLOs the most, with a partial PIK feature.

Alkegen closed a refinancing and debt exchange transaction with holders of 72% of its $800m senior secured notes due 2028 exchanging into new second lien PIK toggle notes due 2029 at 90 cents, and holders of 81% of its $400m unsecured notes due 2029 exchanged into the same new second lien notes at 84 cents, resulting in $792m of new second lien PIK toggle notes being issued.

Pure Fishing raised a $750m credit facility due 2029 from investors while leaving a real estate-backed loan and promissory note due 2027 from Sycamore as PIK.

Jenny Craig parent Wellful agreed to convert cash interest on its second lien loan to be paid-in-kind. The company also opted to PIK the interest that was due at the end of December 2023 and converted $27m of its second lien loan principal to a first lien loan that will PIK.

And this doesn’t even include the remarkable demand for Chobani’s newly issued $650m holdco unsecured PIK toggle bonds due 2029, which rallied over three points on the break even with an 8.75% cash or 9% PIK coupon.

The uptick in the popularity of PIK features doesn’t mean they’re any less risky. We mentioned earlier that the goal is to delay fallout from a deal to a time when a company has dealt with its financial struggles. The obvious problem there is that there’s never a guarantee such a time will come about.

If anything, an LME is often a precursor to a subsequent default — and the transition toward PIK debt has contributed in part to an increase in the number of selective defaults, according to an S&P report from earlier this week. Transitions from cash pay to PIK was one of the top drivers for rating downgrades to SD since 2022, it said.

“Of the 77 entities rated 'SD' since the start of 2022, 21 experienced a second selective default or a general default/bankruptcy,” analysts Ramki Muthukrishnan, Bryan Ayala, Chiza Vitta, and Nicole Serino wrote. “Of the companies that defaulted again, seven experienced their second default within six months. Overall, the average time between the two defaults was less than a year.”

If you have any recent moves to announce, please send to one of our team’s emails below to include in our People Moves section.

Linklaters added restructuring & insolvency partner Daniel Guyder in New York from A&O Shearman as a part of a larger expansion of its finance team.

This week’s news (from articles published in the last seven days)

9Questions — 9fin sat down with Angelo Rufino, who joined Bain Capital in May from Brookfield Asset Management, to talk about his vision for the special situations teams in the US and Europe and opportunities in the current market.

Alacrity Solutions — 9fin reported on restructuring talks with lenders following liquidity issues and customer churn. The company currently has roughly $1.6bn in debt, around $1bn of which is in a first lien loan.

Medical Solutions — Certain lenders of the travel nursing company have engaged Gibson Dunn as its performance is impacted by lower demand for temporary staffing, 9fin sources say.

Echostar / DISH Network — DISH DBS’ bonds traded up this week on the announcement that parent EchoStar would increase exchange considerations for several tranches of the subsidiary’s debt as part of its merger deal with DIRECTV, but steerco creditors are expectedly not keen on the new terms. Additionally, US bank asked DBS secured bondholders for their consent to secure new money from TPG Angelo Gordon that would be secured pari passu with the secured notes.

Office Properties Income Trust — The company’s Q3 24 results exhibited continuing deterioration in performance, and $456.7m of its unsecured notes due 2025 mature in February. As a result, the REIT issued a going concern warning in its filings, after previously disclosing details of negotiations with creditors to push out the 2025 maturity.

Spirit Airlines — Read our deep dive on the troubled ultra low-cost airline’s robust asset base that should help allay the fears of stakeholders as the company navigates merger talks with Frontier Airlines and a potential bankruptcy filing.

FinThrive — The company’s first lien term loan was quoted in the upper 60s, according to sources and 9fin data, amid a two-notch rating downgrade on both the healthcare revenue cycle management provider and its outstanding loan. Rating agency Moody’s says it anticipates an increased risk of default should the Clearlake-backed company fail to turnaround its finances.

EW Scripps — The broadcasting company moved up its Q3 23 earnings release date to “begin to examine the feasibility” of refinancing some of its outstanding debt, according to a company spokesperson. Debt and equity traded up.

CommScope — The company is reported to have engaged with some creditors on discussions to address its debt maturities, and other investors for new money. 9fin had published an LME Breakdown to answer questions around how CommScope could use sale proceeds to address almost $6bn in 2025 and 2026 maturities, after the announcement of the $2.1bn sale of assets to Amphenol.

Bausch Health — The company reported meaningful Q3 24 revenue and EBITDA growth (press release; 10-Q; results presentation; transcript) across segments and management hiked its full-year guidance, and stock rallied. BHC and Bausch + Lomb management were tight-lipped about rumors of an impending sale of BHC’s B+L stake, but BHC management noted that the objective for any transaction remains ensuring “two appropriately capitalized companies” and driving shareholder value. Management also added that BHC’s sizable NOL balance would ensure no significant tax leakage from a B+L sale, and that a return to shareholders from proceeds could be considered, among other options.

Xerox — The company’s stock and bonds dipped following poor Q3 24 numbers and lowered full year guidance (press release; results presentation; transcript).

The Container Store — The storage solutions company’s Q3 24 results missed estimates (press release; results presentation; 10-Q; transcript), and stock fell 52% during the week.

B. Riley Financial — The troubled financial services company continues to raise cash through divestitures. After announcing an agreement with Oaktree for an investment in Great American Group, the company disclosed the completion of a sale of certain retail brand assets for $236m and an agreement with Stifel to sell a part of its wealth management business for $27m-$35m.

SI Group — According to a Fitch note this week, The public exchange component of the company’s LME, which saw meaningful participation and sponsor SK Capital Partners providing $100m of capital, closed on 23 October.

STG Logistics — According to S&P and Fitch notes this week, the company completed its drop-down, new money LME. 9fin reported the details of the deal in October.

P&L Development — The family owned OTC drug manufacturer completed its exchange offer, launched in October, issuing $368.5m in PIK-toggled notes due 2029 for $350m in 7.75% senior secured notes due 2025. Also, certain creditors committed to purchasing an additional $131.5m of new notes.

Wellpath — The HIG-backed prison healthcare company is reported to be preparing to enter bankruptcy. 9fin had reported on the company and its creditors having hired advisors in June.

TGI Friday’s — The casual dining chain is said to be nearing a bankruptcy filing. It was earlier reported to be seeking DIP financing in preparation for a filing.

Northvolt — The Swedish electric battery manufacturer, which 9fin reported has hired advisors to explore in-court restructuring options in both the United States and Sweden, is said to be on track to receive $300m of rescue financing. Meanwhile, stakeholders (equityholder ATP; JV partners Hydro and Galp) continue to pare their exposure to the company.

CareMax — The value-based healthcare provider continues to extend waivers under its credit agreement, most recently through 4 November. 9fin earlier reported that the company is laying the groundwork for a potential bankruptcy filing. 

Sotheby’s — The Patrick Drahi-owned auction house, with its own non-Altice troubles, is reported to have received a $1bn investment from an Abu Dhabi sovereign wealth fund. Around $800m of the cash infusions will be used to pay down debt.

Earnings — Other companies on our radar reported quarterly earnings: Cumulus Media (9fin earnings review; press release; transcript); Sunnova (press release; 10-Q; results presentation; transcript) Nine Energy Service (press release; 10-Q; transcript); Uniti (9fin earnings review; press release; results presentation; transcript)

Big Lots — The debtors lease sale order was approved which established procedures for the debtors to sell or transfer certain unexpired leases of non-residential real property and scheduled an auction and a hearing to sell certain leases.

Purdue Pharma — Judge Sean Lane extended the company’s mediation deadline until December 4th as the parties say they are getting closer to a new reorganization plan. In addition, Judge Lane indicated that he intended to approve the UCC’s request for standing to pursue litigation claims against third-parties should the mediation ultimately fail.

Red River Talc (J&J) — The debtor’s case management order was approved at this week’s status conference, confirming that the path to confirmation and the case to dismiss will proceed in parallel.

Tupperware — Judge Brendan Shannon approved the ad hoc lender group’s deal to purchase Tupperware’s brand and major operating assets in exchange for a credit and cash bid. Other secured lenders will be able to buy pro rata shares of new debt issued by the ad hoc group.

Vertex Energy — The debtors secured final DIP approval along with other second day relief on an uncontested basis at its second day hearing.

Conn’s — The sale hearing for the winning $360m stalking horse bid  from Jefferson Capital Systems was pushed to 6 November.

Other active distressed and restructuring coverage (from articles prior to the past seven days)

CLOs and LMEs — CLO managers are devoting more time to predicting and reacting to LMEs, given their ubiquity. Of the LMEs this year, Lumen’s debt exchanges ($3.3bn of CLO exposure), followed by Global Medical Response’s amend and extend of its roughly $4bn of loans ($1.9bn of CLO exposure) have affected CLOs the most, according to 9fin data.

LME trends — 9fin published the maiden edition of a series focusing on sharing data-driven insights and trends on LMEs. In the first article of this series, we found that the vast majority of troubled companies that have initiated LMEs this year turned to their existing lenders to raise new money. However, multiple sources say there might soon be a reversal to the trend as these existing creditors become more experienced and are now approaching the negotiation table with greater sophistication.

Clearlake and LMEs — We published the maiden edition of our LME profiles of private equity sponsors with a focus on Clearlake’s portfolio companies, which show distress is concentrated in the firm’s sixth buyout fund. At least 11 of the 50 “current investments” listed on the company’s website carry debt that trades below 85 cents on the dollar — the metric we used to define distress.

US Distressed/Restructuring Tracker Report — We published our first monthly report covering notable situations/transactions in our restructuring tracker that are on our watchlist, are expected to materialize, are in progress or were recently completed. The tracker is a work in progress and, in the coming months, 9fin will roll out many user-friendly updates to the tracker and will complete a backfill exercise. Meanwhile, we welcome any suggestions for improvements.

Distressed Pitch List — In an update to our Distressed Pitch List, we added Plug Power and Sunrun.

24 Hour Fitness — The fitness chain is working with Piper Sandler to explore strategic and refinancing options ahead of $300m in debt coming due 2025.

Allen Media — After the media company engaged two law firms to explore options ahead of an upcoming debt maturity, a group of term loan lenders holding $100m are also said to have organized. Multiple groups of other lenders were earlier reported to have united under a single cooperation agreement.

Altice France — 9fin explored XpFibre’s recent refinancing and dividend recap, tallying up the portion of the €5.8bn of credit facilities raised at Altice France’s unrestricted joint venture used to refinance existing debt versus adding to Drahi’s war chest in negotiations with lenders.

Altice International — After the company sold its first asset since announcing its strategic review and since Altice France’s ultimatum, listeners on the Q2 24 earnings call were keen to hear how the telco would apply the Teads sale proceeds. It’s fair to say management was slightly ambiguous. 9fin’s earnings review is available here.

Altice USA — 9fin explores the different options available to Altice USA and its creditors in our LME Breakdown.

Alkegen — The insulation products manufacturer closed an Oak Hill-led refinancing of its revolver and term loans due 2025 and a private exchange for its notes with a subset of holders, and launched a public exchange for the remaining notes.

AMC Entertainment — The 1L noteholders who were left out of the AMC’s recent LME have filed a complaint in New York State Court alleging AMC and its junior creditors violated the intercreditor agreement in effecting this transaction. We summarize the complaint here.

Anastasia Beverly Hills — Crossholders are in talks to renew a cooperation agreement set to expire in the near-term, following weaker than expected second quarter earnings.

Ardagh — A crossholder group of the packaging company’s bondholders has extended a co-op agreement from October to mid-December, two sources told 9fin. The group is being advised by Gibson Dunn and Perella Weinberg Partners. Management faced a tense Q&A on its Q3 24 earnings call after it cut its FY 24 EBITDA guidance.

Aventiv — Following a deal with lenders to either sell the business or equitize outstanding loans to hand control to lenders, the Platinum Equity-backed prison telephone company is said to have told investors that multiple parties have expressed interest in a buyout.

Better Health (fka Physician Partners) — The healthcare provider and lenders hired advisors ahead of potential negotiations with the company and sponsor Kinderhook Industries.

Beyond Meat — The producer of plant-based meat substitutes is reported to have engaged with a group of convertible noteholders on a restructuring.

Brightspeed — Some bank lenders are reported to have begun trying to unload the long hung debt (presumably the debt recently exchanged into) of the Apollo-backed internet provider.

Cox Media — The Apollo-backed media company unveiled exchange offers for its term loan, unsecured notes and revolver, backed by a transaction support agreement with holders of around 88% of the aggregate principal amount of the notes. The company aims to push out the loan and note maturities to 2029.

Drive DeVilbiss Healthcare — The CD&R-backed company has embarked on a sale process that could involve selling its assets piecemeal or as a single entity. Drive, which makes medical equipment, previously went through an out-of-court restructuring, in which the sponsor kicked in fresh cash and existing first and second lien lenders agreed to extend the debt wall.

Del Monte Foods — Asset manager Black Diamond is suing Del Monte Foods in an attempt to force the removal of the food company’s board of directors following a liability management exercise earlier this year.

Empire Today — The Charlesbank Capital Partners-backed flooring company has hired advisors after lenders organized.

EmployBridge — Certain lenders have organized as the company reported weaker performance with debt trading poorly and rumors of the company’s sponsor Apollo buying back debt in the secondary market.

Forward Air — The troubled freight transportation company is reported to have ceded to activist investor demands, hiring investment bankers to sell itself.

Fossil Group — Following quarters of dismal results and with an operational restructuring ongoing, Fossil announced the resignation of its CFO and the appointment of Andy Skobe of Ankura to provide interim CFO services.

FreshDirect — The grocery delivery company is set to get some rescue financing from its parent company, Getir, to help support its operational needs.

GPS Hospitality — The privately owned quick service restaurant franchisee disclosed poor quarterly numbers, and senior secured notes dropped 11 cents.

GrafTech International — Certain creditors have signed a cooperation agreement to bind their acts together in potential negotiations with the company.

Hawaiian Electric — The utility company raised nearly $500m (and potentially another $75m) through an equity offering aimed at raising cash to fund its contribution to the Maui wildfire litigation settlement.

Hearthside Food Solutions — The company reported Q2 24 earnings showing widening losses and warned that its ability to continue as a going concern depended on its efforts to address a raft of near-term debt maturities.

Hertz — 9fin published its fourth LME breakdown, this time on Hertz, discussing how the car rental company could push out near-term maturities, meet the leverage covenant in its credit agreement and potentially raise cash.

iHeartMedia — iHeartMedia has yet to strike a deal with its largest creditor group.

Intrum — Solicitation of Intrum’s proposed Chapter 11 plan commenced on 17 October. Intrum intends to enter into Chapter 11 on or before 17 November in the US Bankruptcy Court for the Southern District of Texas. Also, the company announcing earnings that show investment and servicing income dropped and management noted that the company is adamant about moving forward with its plan to file a crossborder in-court restructuring in the US and Sweden.

KIK Consumer Products — The company’s bonds plunged after news of a fire broke out at its facility in Atlanta. In a message to private lenders, KIK said the fire and resulting damage was limited to an insured warehouse and its production areas can restart once the area is safe to re-enter.

Leslie’s — The swimming pool maintenance and supply company shared a bleak preview of the third quarter and full year, sending its stock and term loan tumbling.

LifeScan — Per an S&P note, the Platinum Equity-backed medical device company skipped principal and interest payments on its third lien term loan and entered into a forbearance agreement through 29 October with its first and second lien lenders.

LOGIX Fiber Networks — The fiber-based voice and data company hired Houlihan Lokey to advise it ahead of an upcoming maturity wall.

Lumen — The telecom company’s debt traded up after it announced a partnership with Meta to expand the tech giant’s network capacity.

Lycra — The US-based spandex maker is approaching private credit lenders and opportunistic credit funds about raising $350m, which will be used to repay its super senior debt, sources said. Price talk on the private credit deal is coming together but will likely be in the range of SOFR+800bps-850bps, sources said.

Mavenir Systems — Lenders are in confidential negotiations with the Texas-based software company as they try to find ways to increase its financial breathing room.

Medical Properties Trust — The distressed real estate REIT forked over another $2m to Steward’s FILO lenders for the sale of some the bankrupt hospital’s Florida properties. An individual investor from Texas announced a surprise 6.2% equity stake in MPT which amounts to around a $200m investment. The independent members of MPT’s board had earlier cleared the company and its management of Viceroy Research’s allegations of wrongdoing, including in relation to MPT’s dealings with bankrupt tenant Steward Health Care. 9fin has published a deep-dive report on the troubled US-based healthcare REIT.

Michaels Stores — The Apollo-owned arts and craft retailer reported a more than 20% decline in Q2 EBITDA due to weaker sales and margin pressure, sparking its bonds to edge down.

ModivCare — The medical transportation provider obtained covenant relief from bank lenders while it negotiates a long-term deal. It had recently revised its 2024 adjusted EBITDA guidance downwards, filed an S-3 looking to raise $200m of capital, and amended financials to include a going concern warning in the midst of difficulties collecting on receivables.

MultiPlan — The company successfully defended against an antitrust complaint filed in the Verity Health System Chapter 11 case by the liquidating trustee.

New Fortress Energy — The energy company, facing a wall of debt coming due in the next two years, has struck a deal with secured noteholders to push out maturities until 2029 and issue $1.2bn of new 12% senior secured notes (press release here). Holders of its $1bn revolver have also tapped Lazard as an advisor as that facility comes due in 2026, 9fin sources say. The company also delayed the payment of its previously declared dividend.

OnTrac — The company, formerly known as LaserShip, has been considering raising new money through a potential drop-down deal with third-party lenders, according to 9fin sources. The proposed out-of-court restructuring comes after recent month’s hard-fought negotiations with a creditor group that organized with Gibson Dunn.

Oriflame — The Swedish-Swiss multi-level marketing company has added Kirkland & Ellis to its advisory roster for refinancing discussions with lenders, after it set up for a potential LME and bondholders signed a co-op. The company has a €100m RCF, €250m senior secured FRNs and $550m senior secured notes maturing in the next two years.

Packers Sanitation — The sanitation company was downgraded to CCC- on the increasing principal outstanding on its mezzanine facility due 2025 potentially complicating refinancing efforts.

Porter Airlines — The Canadian airline has gauged interest from private credit lenders in raising CA$250m in preferred equity to boost liquidity.

Pure Fishing — The Sycamore-backed company has raised a $750m credit facility due 2029 from investors including Monarch Alternative Capital and Silver Point Finance, with proceeds to tackle its term loan and asset-backed loans. 9fin caught wind of the financing raise prior to the company’s announcement.

Quest Software — Trading desks have begun publishing quotes on the Clearlake-backed software company’s debt distinguished between co-op and non-co-op paper, with its term loans in distressed territory.

Radiate Holdco (aka Astound Broadband) — The company has received a new $50m loan from its private equity backer Stonepeak. It has been exploring restructuring options with a group of lenders, but the talks fell apart over certain terms of the proposed debt swap and new money offer.

Top loan movers (link to full screener on 9fin)

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