The ATM route worked to various degrees for companies including AMC Entertainment, GameStop, Exela Technologies, and Peabody Energy — though it didn’t quite work for Express or GTT Communications (Geo Group briefly memed and registered an ATM but never raised any money with it, yet was able to do a distressed exchange, and now is able to tap the regular way capital markets).

The next phase emerged with Carvana, which notably combined ATM issuances along with negotiations with bondholders who formed a giant co-op group — perhaps limiting the company’s ability to play creditors off each other. The ultimate result after nearly a year’s negotiations was a near-unanimous debt exchange agreed to involving PIK debt to reduce cash interest. The company turned things around, and now its debt is all trading at or above par.

Which brings us to today. A full slate of public companies is facing unsustainable capital structures and complicated creditor negotiations. There are a growing number of tools that are being utilized to help public companies extend runway for shareholders while attempting to walk the tightrope of getting some concessions from different creditors without getting sued.

Office Properties Income Trust, while not completely out of the woods, completed a unique exchange that offered similarly situated debt different levels based on maturity. CommScope’s recently announced asset sale, the proceeds of which can be placed in an unrestricted subsidiary, has created a major shift in negotiations with two key creditor groups.

And the most recent is the most interesting, drawing from all of its predecessors and including innovations that may be situation specific but potentially could prove instructive. AMC’s debt deal, which was announced last week and being finalized as we speak with the exchange deadline now passed involves two new things: 1) The combination of a convertible note with a drop-down transaction, allowing junior creditors to shoot for equity returns (Carvana was instructive given how its equity is trading currently, a similar convertible deal would have been a 10x return versus just 20% or 30% upside at best); and 2) It was a deal struck first with junior creditors who were going to exchange into a convert structurally senior to all other debt, and then senior lenders were given the option to exchange into debt that would then come in front of that convert, priming the primer! Noteholders of the 7.5% first lien notes not really looped into the transaction are still making some waves, but this has been a tremendous fell swoop dealing with all the near-term maturities (At the risk — or hope — that all other FAs will reach out to highlight their market-leading LME practices, we’ll note that Moelis was the company-side FA in all three of these examples as well as Carvana).

Lastly, there’re still plenty of stiff arms still outstretched: Generally, companies that are controlled by uncompromising billionaire magnates or families (DISH, all the Altices, Ardagh, Bausch) are taking fairly aggressive postures that they are willing to risk fraudulent conveyance and other related lawsuits by moving or threatening to move assets away from creditors and then ask for concessions to give them back.

9fin’s Q&A with Paul Hastings' restructuring co-heads this week touched on “cross-class” cooperation agreements, such as the ones being utilized in Bausch, Altice, and in some ways iHeart Media — and such agreements are only expected to proliferate.

So get ready for more co-ops and more cooperation and more delicate negotiations combining the most interesting parts of private company LMEs and public company restrictions.

The Default Notice is produced by 9fin’s distressed and restructuring team: Max Frumes | max.frumes@9fin.com, Rachel Butt | rachel@9fin.com, Max Reyes | max.reyes@9fin.com, Kartikeya Dar | kartik@9fin.com, Cat Corey | cat@9fin.com Jane Komsky | jane.komsky@9fin.com and Teri Buhl | teri.buhl@9fin.com.

This week’s news

AMC Entertainment — 9fin reported exclusive details on how the company’s advisors opted to strike a deal run through the second lien holders to orchestrate a creative liability management deal that has garnered nearly full participation by holders of the $1.9bn outstanding of term loan debt due 2026. The 7.5% first lien notes, however, were not part of the deal and are rattling their sabers to get cut in somehow.

Pluralsight — Why did the Vista Equity-backed company move some IP assets into a subsidiary, only to potentially hand the keys over to a group of private credit lenders? We delved into the possible incentives of the J.Crew-like maneuver and what this means for a corner of credit that touts more stringent lender protections and tight-knit relationships.

E.W. Scripps — Certain near-dated term loan holders have organized with Davis Polk as they gear up for potential negotiations with the broadcaster. Lawyers including Paul Weiss are also trying to round up longer-dated debtholders.

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

Wheel Pros — The Clearlake-backed company has entered into a short grace period after skipping interest payments tied to its term loans.

Incora — The 2024/2026 noteholder group has asked for, at a minimum, the same adequate protection package given to Pimco and Silver Point at the start of the case given the court’s recent ruling in the uptier litigation.

Steward Health Care — The physician-owned healthcare provider received court approval to reject one of its two master lease agreements with Medical Properties Trust and Macquarie after no qualified bid was willing to include the lease.

Magenta Buyer/McAfee — The company is reported to be considering a proposal for a $400m first-out new money term loan from Elliott. 9fin had earlier reported that a lender group has become restricted to engage in confidential negotiations with the company, shortly after it held discussions with creditor Elliott for new money.

Enviva — Enviva filed an application to retain Paul Weiss as debtors counsel and Vinson & Elkins as special counsel after its first two attempts to retain V&E failed.

Sunnova Energy — The 2026 and 2028 bonds of the residential and commercial solar company rose after executives outlined a plan to raise cash through securitizations and asset sales to pay off existing debt. 9fin had reported in May on the company hiring advisors and agreeing to several funding deals.

Hertz — The rental car company reported a meaningful decline in EBITDA as it continued to recognize losses and write-downs relating to its fleet in Q2 24, but management provided a clearer timeline for the completion of its fleet transformation plan.

Spirit Airlines — The troubled ultra low-cost airline reported poor Q2 24 earnings and disclosed a poorer outlook for the next quarter amid industry oversupply and a “shift from being just low-cost and low-fare to delivering value with low cost”. Company executives were unwilling to share details of their conversations with bondholders on upcoming maturities.

Altice International — The telco announced its AdTech business, Teads, is to be acquired by industry peer, Outbrain, for $1bn. Since its French counterpart’s ultimatum, Altice International’s creditors have been wary that a similar stunt may be pulled on them but details are thin. We discuss Altice’s options and the potential deleveraging here.

Fisker — Primary secured creditor Heights Capital agreed to extend Fisker’s access to cash collateral by three weeks to allow parties to reach a settlement in the Chapter 11 case. Heights had earlier requested the court to convert the case to Chapter 7.

Magenta Buyer — The company is reported to have struck a deal with its lenders, including Elliott Investment Management, to raise $400m of new money and exchange existing debt at discounted prices. 9fin had earlier reported on talks between the company and its creditors.

Distressed Pitch List — Multiplan, Anywhere Real Estate and Uniti Group, which are on 9fin’s Distressed Pitch List, reported earnings. Multiplan’s stock and bonds have tanked after the company reported another set of disappointing results, lowered FY 24 guidance, and announced the exit of its CFO. Anywhere Real Estate reported solid EBITDA growth and provided some clarity on the company’s approach to the uncertainty that the NAR settlement presents. The Distressed Pitch List will return next week.

Earnings — Other companies on our radar also reported quarterly earnings: Altice USA (press release; transcript), Bausch Health (press release; transcript), LivePerson (press release; transcript), Office Properties Income Trust (earnings presentation; transcript) and WW International (press release; transcript).

Other active distressed and restructuring coverage

Alkegen — Formerly known as Unifrax, lenders to the specialty materials maker formed a coop as the company vetted financing proposals from third party investors.

Allen Media — A group of lenders has hired an FA in preparation of liability management talks with the company.

Altice France — The telecom company is set to hold its debt investor call 29 August. 9fin’s deep-dive report explores the range of possibilities given the various moving parts.

Altice USA — A three-year co-op in place pushed the limits of these long-term defensive maneuvers.

American Physician Partners — For the vendors and firms owed money by a bankrupt company, the primary motivation to join an Unsecured Creditors’ Committee is often simple: maximize economic recoveries. Listen as Doctor Dennis Deruelle recounts his experience in navigating the rapid shuttering of APP and what lessons we can learn from it.

American Rock Salt — The salt company and lenders hired legal counsel to address elevated leverage and volatile demand, according to sources.

Anthology — Nearly 100% of the first lien loans of the Veritas-backed ed-tech company are said to have agreed to exchange under a liability management deal that 9fin had reported was launched after negotiations with an ad hoc group of first lien lenders.

Ardagh – The glass bottle maker (ARGID) and metal cans producer (AMP) separately reported results on 25 July.

Astound Broadband — A group of lenders started confidential talks with the Stonepeak-backed internet and cable provider. While the company has far-dated debt maturities, it is grappling with a cash flow squeeze.

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

B. Riley Financial/Franchise Group — Franchise Group shareholders have sued the company’s executives and minority owner B. Riley over alleged breach of fiduciary duties in relation to the franchise holding company’s 2023 take-private deal. 9fin had earlier reported that Franchise Group and its lenders had hired advisors following weak earnings and news of Conn’s — in which it holds a large chunk of equity after it sold a business to Conn’s in 2023 — considering bankruptcy. Conn’s subsequently filed.

Brightspeed — Sponsor Apollo and lenders to the telecom company were reported to be in discussions for a restructuring involving the banks taking a haircut on their existing debt and providing $3.5bn of refinancing. 9fin had earlier reported on noteholders at Embarq, a Brightspeed subsidiary, having appealed a judgment that thwarted their attempt to seek redress for their subordination in an LBO in 2022.

CareMax — The value-based healthcare provider paid lenders a 3% PIK fee to execute an eighth amendment to its credit agreement, which provides for $20m in incremental term loan facilities and extend waivers through 15 August 2024.

Carestream Dental — The company reportedly began confidential talks with lenders to raise capital. 9fin had earlier reported that CD&R and CareCapital Advisors-backed company has been working with Jefferies to address its revolver and term loan maturities this year.

Chicken Soup for the Soul — Chicken Soup filed for Chapter 11 protection and reached an agreement with prepetition agent HPS Investment Partners for a DIP, but its case was converted to Chapter 7 after its lenders indicated that they would not be willing to fund any additional post-petition financing following shocking allegations of mismanagement at the debtor companies.

CommScope — 9fin published the first of many LME Breakdowns, 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.

Conn’s Inc — Conn’s, a home goods retailer, filed for Chapter 11 protection in the US Bankruptcy Court for the Southern District of Texas, seeking to effectuate an orderly wind-down of its business. You can read more about the case here.

Cox Media Group — A steering committee has kickstarted negotiations with Cox Media on ways to address its upcoming debt maturity.

Del Monte Foods — The company is in talks with existing lenders about a potential new money injection after efforts to raise secured debt from third parties failed.

Diamond Sports Group — Diamond Sports Group has adjourned its confirmation hearing to a date to be determined as it seeks to finish negotiating a possible deal with Comcast, the NBA and the NHL.

EchoStar/DISH — Bondholders to the EchoStar subsidiary Hughes Satellite Systems are reported to have engaged Glenn Agre to explore remedies for value leakage in the form of a recently disclosed lease agreement for a satellite. The agreement requires Hughes to pay $15.9m monthly to EchoStar, and Hughes has also made a $100m prepayment under the lease.

Emergent BioSolutions — Holders of Emergent’s 3.875% SUNs due 2028 stand to receive a high potential recovery amid a stabilization of earnings, per 9fin analysis, as our illustrative waterfall outlines a scenario-based recovery of between 92% and 93% with the bonds quoted near 60 cents.

EmployBridge — Certain lenders have organized with Gibson Dunn 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.

Express — Express received permission to move forward with its sale process, and rapidly concluded the process, announcing that Phoenix Retail — a JV owned by WHP Global (majority owner of the entity holding Express’ IP), Simon Property Group, Brookfield Properties and Centennial Real Estate — emerged as the winning bidder for substantially all its assets.

EyeCare Partners — The vision care network completed its liability management deal involving $275m of new money and a discounted debt exchange that offered better terms to lenders who participated early and were involved in confidential talks with the company.

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.

Gol Airlines — Gol’s Abra bondholder group disclosed updated members and holders including distressed investors. The bankrupt airline has said it will evaluate all recapitalization or other transactions, including to raise capital while in bankruptcy. In recent days the UCC has objected to the debtors attempts to allow aircraft lessors to sell a participation interest in their unsecured claims, while retaining their voting rights on any potential Chapter 11 plan.

Gray Television — The broadcaster announced a $250m debt repurchase plan along with Q1 24 earnings that showcased a year-on-year improvement, sending prices of its debt and shares higher.

Hearthside Food Solutions — Certain creditors have started confidential negotiations with the company, as the company faces roughly $2bn of term loan maturities in 2025 and $350m in unsecured bonds due 2026.

iHeartMedia — The steering committee of the Pimco-led ad hoc group advised by Davis Polk and Perella Weinberg has gotten restricted to engage in negotiations with the company.

Incora — Judge Marvin Isgur ruled that the aerospace parts supplier’s disputed March 2022 transaction breached certain bond indentures, dealing a blow to Platinum Equity and other creditors who participated in that deal. Here’s a look at what the ruling could mean for future LMEs, and here’s a transcript with Judge Isgur’s oral decision.

Invitae — After hearing arguments on the UCC’s standing motion for litigation related to uptiers, and arguments over makewholes, Judge Michael Kaplan decided to issue a preliminary ruling denying the standing motion and reserved his ruling on the makewhole issue.

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

Mobileum — Telecommunications analytics firm Mobileum filed a prepackaged Chapter 11 bankruptcy, covered here.

Petrofac — The energy services company has defaulted on its senior secured notes after failing to convince lenders to extend the grace period on a missed interest payment.

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

Purdue Pharma — Purdue Pharma and its creditors will move forward with 60-day mediation to try to come up with a settlement that would satisfy the Supreme Court’s ruling. If a settlement cannot be reached, the UCC in the case will pursue litigation against the Sackler family that the UCC estimates is worth approximately $11.5bn.

Red Lobster — Red Lobster has to modify its “opt-out” procedure for consenting to third-party releases in its proposed plan after the UST argued that the decision in the Purdue Pharma case prohibited such relief.

Restaurants Distress — A recent string of restaurant bankruptcies, including Rubio’s Coastal Grill and Red Lobster, suggests a bleaker outlook for the sector.

Rite Aid — Rite Aid notched a win when the judge overseeing the case ruled in favor of Rite Aid on a working capital dispute in the Elixir APA — an approximately $200m dispute, and then agreed to confirm the Chapter 11 plan. Rite Aid also received approval to sell $435m of a term loan issued by Elixir structured as a seller note held by Rite Aid. However, all is not resolved — MedImpact, Elixir’s purchaser, has appealed the Elixir ruling, and others have appealed confirmation.

Robertshaw — Judge Lopez found that the One Rock-sponsored company violated its credit agreement when implementing an LME in December — engineered with the support of Bain Capital, Canyon Partners and Eaton Vance, but confirmed that the participating lenders remained “required lenders” under the credit agreement. Invesco, the contesting lender, is only entitled to assert monetary damages and not equitable remedies, per the judgment. Invesco has since appealed the judgment and has claimed over $100m in damages supported by a comprehensive analysis (see the proof of claim), while Judge Lopez has approved Robertshaw’s sale to the participating lender group.

Rodan & Fields — The multi-level marketing company, in which TPG owns a minority stake, announced a comprehensive liability management exercise aimed at reducing debt from $614m to $105m. The transaction, which has the support of around 86% of the existing second-out and 56% of the third-out term loan, includes $75m in priming new money, uptier exchanges (with a subsequent equitization of uptiered loans handing control to lenders), and non-consenting lenders being stripped of key protections.

Rubio’s Restaurants — Rubio’s filed Chapter 11 bankruptcy in order to sell itself.

Salem Media — Certain debtholders have banded together with Paul Hastings to negotiate a possible debt restructuring with the conservative Christian media company.

SI Group — The chemical additives company shared preliminary 2023 results, which left some investors questioning the sustainability of its capital structure, even as its business shows signs of recovering.

SIRVA — The moving services company was downgraded by S&P from B- to CCC. The S&P note states that on 25 April, SIRVA’s first and second-lien credit agreements were “modified to pledge more equity from subsidiaries as collateral to lenders, to 100% from 65%, which we view as lenders' concerns over the company's performance and ability to manage its obligations in a difficult operating environment.” This comes after it raised a new money priming loan (per S&P a $84m delayed-draw term loan) in order to bridge the company to a broader debt restructuring.

Springs Window Fashions — The Clearlake-backed window treatment company retained Kirkland & Ellis and Centerview to engage with creditors who have organized into two groups, both with cooperation agreements in place. One creditor group holds a majority of the company’s term loan debt, while the other holds upwards of 40% of the term loan debt plus over two-thirds of the company’s bonds, according to sources.

STG Logistics — 9fin reported that STG lenders signed a cooperation agreement, which would bind them together in potential negotiations with the company.

SunPower — The struggling residential solar power company endured another rough week, as its stock plummeted after it was reported to have told dealers it would halt shipments and cease supporting new installations. Recently, SunPower’s auditor EY resigned (and responded to the 8-K announcing the resignation) and details of financial misconduct allegations against senior management and the SEC’s examination of its revenue recognition practices were revealed.

Telesat Canada — The Canadian satellite company posted expected declines in revenue, EBITDA and margins in Q1 24, and reaffirmed guidance for the full year. Backlog and cash generation for the legacy business declined as Telesat continues to lose GEO customers and focuses on Lightspeed. Certain creditors are reported to have hired Evercore and Lincoln International for advice. 9fin earlier provided a comprehensive analysis of the company’s disappointing FY 23 earnings and FY 24 guidance.

The Container Store — Certain lenders are getting legal advice from Paul Hastings, as the retailer faces a term loan maturity in 2026 and an uncertain earnings trajectory.

Tupperware — Tupperware disclosed a further extension of its forbearance agreement with its lenders, this time to 15 August, and a requirement from lenders that it deliver letters of intent for a repayment transaction by 31 July. The company had recently announced the departure of its CFO.

TGI Friday’s — The restaurant chain has engaged an FA to raise roughly $200m of new funding to pay down debt.

Thrive Pet Care — The company hired Evercore to examine options for its debt stack, 9fin reported. Meanwhile, a group of first lien lenders is seeking advice from Akin Gump as they brace for potential negotiations with the TSG Consumer Partners-backed company, sources said.

United Site Services — The portable toilet rental company is set to tap a $115m commitment from sponsor Platinum Equity as it battles weaker earnings amid an inflationary and higher rate environment.

VeriFone — Lenders to the payment and commerce solutions company have organized with Gibson Dunn as they prepare for negotiations ahead of the maturity of the company’s $250m revolver and over $2bn of term loans in 2025.

VistaJet — The private jet subscription company released Q4 23 results, with the company’s founder penning a letter announcing legal action against a “group of individuals” that has “disseminated half-truths, false rumors and lies”.

WW International — Weight Watchers creditors, which organized with Gibson Dunn, have signed a cooperation agreement to work together ahead of potential debt talks with the beleaguered diet company.

Wellpath — The HIG-backed prison healthcare company is working with Lazard to explore options ahead of a revolver maturing and a first lien term loan becoming current in October. A group of lenders is said to have tapped Akin Gump and have taken pitches from bankers, with Houlihan Lokey in the pole position.

WOM — WOM avoided a two-day trial on a motion to dismiss filed by an ad hoc group of unsecured noteholders and brokered global peace in the case. With the motion to dismiss out of the way, the company was able to receive final DIP approval and move forward with a marketing process.

Workhorse — The electric vehicle company continues to raise capital through the issuance of convertible notes and warrants and employ cost-cutting measures to address cash flow pressures. 9fin had earlier reported that the company is working with Stifel to help raise bridge financing.

WorldStrides — Lenders to the student trip company have retained Ducera Partners in order to develop potential alternatives to the recently expired discounted exchange offer.

Xplore — The Canadian rural internet provider announced an agreement to raise new debt and equity financing, with sponsor Stonepeak and certain existing lenders leading the investment and other lenders to get the opportunity to participate on substantially similar terms. Xplore has commenced a proceeding under the Canada Business Corporations Act to implement the deal.

Vyaire Medical — Vyaire, a breathing technology company, commenced Chapter 11 after post-pandemic macroeconomic challenges led to a liquidity crisis. Backed by an RSA with a first lien ad hoc group, the company intends to continue to pursue a prepetition marketing process. The company also received interim approval of its $180m DIP facility at its first-day hearing.

Zayo — 9fin broke the news that Zayo is working with banks to help gauge investor interest in raising new debt at its recently carved out Europe subsidiary.

Weekly declines

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

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