Winding Up — American exports, British electoral time

9fin team

24 May 2024•6 min read

While Altice may not feature in the headlines or news of this week’s Winding Up, it remains firmly on the minds of 9fin’s reporters. That may be because, for certain reporters, it was the first thing they saw when they arrived in New York.

Source: 9fin (Wherever you go, odds are Drahi has been there first)

What else we have learned: First, the US exported blue jeans, rock music, and action movies — as well as boat-loads of public and private capital into European markets. Once Europe was hooked, then the US began to export its brand of liability management exercises and certain creditor-based-legal agreements, namely the cooperation agreements between creditors in Altice and Ardagh.

Altice’s aggressive liability management exercise also feels somewhat foreign to the conventional wisdom of the European market — that issuers and investors ought to maintain convivial relations or else future financing might be harder to obtain.

One New York-based legal advisor explained the emergence of cooperation agreements in both instances as a function of the fact that US funds are so heavily involved in both situations. It’s what works in the US, so why not use it in Europe?

The year of the election

Rishi Sunak will not be the Prime Minister come 5 July is likely a thought we’ve all shared. Though not unexpected, Sunak’s decision to call an election on 4 July caught us by surprise. (As 9fin’s American colleagues, used to the set four-year cycle, chuckled this week in the office, “Oh hey let’s just call an election!”)

While there is still time for a miraculous turnaround, at the time of writing most opinion polls indicate that the Labour Party has 20 percentage point lead. See this BBC article for more detailed breakdown.

Opinion polls can be wrong, and there does typically tend to be some tightening of the spread in voter opinion between the two major parties during an election. But most outlets and columnists seem to agree that the Conservatives’ 14-year rule of Britain will come to a close.

What will a Labour government look like for the UK financial markets? Much of a muchness, probably.

The two parties diverge on social issues but are more or less aligned on fiscal policy. Rachel Reeves, Labour’s shadow Chancellor of the Exchequer, has gone to great lengths to outline the importance of fiscal rules and how the Labour party would stick to them. A government has a lot of flexibility in its approach to fiscal rules, so your trust in Reeves’ statements may vary.

But Kier Starmer’s focus on wooing the City of London and soliciting donations from figures in business and finance offers a clear indication that the firmly left-wing Labour Party of 2019 is all but dead and buried — it has now expelled Jeremy Corbyn, the leader of the party at the 2019 election. See this FT article for more details on the party’s charm offensive.

“You believe that politicians have much impact on economic activity?” one London-based advisor asked when questioned about the likely affect of a change in government.

Before moving onto the news, we’ll highlight the sterling work of Freddie Doust, Michelle D’souza and Chris Haffenden in putting together a feature explaining the tools available to CLOs in restructuring processes and how they can behave more like distressed funds than might be assumed.

Honourable mention also goes to Dan Alderson, who keeps our CLO caps firmly screwed on this week with an exploration of how CLO funds are navigating distress in the European labs sector.

This week’s news

Accell — The Netherlands-based bicycle manufacturer reported another set of soft earnings for Q1 24, according to 9fin’s sources. Adjusted EBITDA came to €67m, but reported EBITDA came to -€24m. Accell’s lenders — which includes the likes of Invesco, ICG, Angelo Gordon, and Capital Four — appointed Houlihan and Milbank as its advisors for negotiations with Accell’s sponsor KKR back in March.

Atos — The French software company’s creditors are in favour of Onepoint & Butler Industries being the anchor investors in the group’s restructuring plan, two sources close to the situation told 9fin. The creditors prefer their offer over Daniel Kretinsky and Attestor’s offer due to the low recoveries it would entail, these sources said.

IGM Resins — At a convening hearing on 2 May, Justice Zacaroli allowed the Scheme company Ignition Midco B.V. to convene a meeting for a single class of creditors on 30 May. Creditors need to vote on the restructuring by 5pm BST on 28 May, according to the company’s skeleton argument. The sanction hearing is scheduled for 6 June.

Kloeckner Pentaplast — The German plastic packager’s secured creditors have appointed Gibson Dunn and Houlihan Lokey as concerns mount over the company’s ability to do a straight refinancing for its 2026 maturities, two sources familiar told 9fin. The group of creditors holds a majority of the debt across the SSNs and the TLB (both euro and US dollar tranches).

Medical Properties Trust — The US-based hospital real estate investor issued an $800m 10-year loan secured against certain properties in its UK portfolio on Friday, according to a company announcement. UK-based real estate investors Song Capital were named as a leading lender behind the transaction. Medical Properties Trust said it intended to use the proceeds of the deal to repay near-term debt and borrowings under its RCF.

Seqens — The French pharma firm nixed speculation that its EBITDA could shrink by as much as €50m in its Q1 2024 call this week, according to 9fin’s sources. EBITDA nearly halved at €40m, down 47% YoY.

SBB — The troubled Swedish real estate company failed to convince the English High Court to throw out a shorter trials scheme application from US-based hedge fund Fir Tree Capital. A four-day hearing over a purported covenant breach and acceleration notice from the hedge fund has been booked for the week of 13 January, with pre-trail review slated for 13 December.

The Very Group — The digital retailer and short-term credit provider’s shareholders, the Barclay family, have entered a “tripartite agreement” with lenders at several levels of the group’s capital structure to extend certain obligations to allow for the sale of all or part of the shareholding in group parent VGL HoldCo, according to accounts filed by VGL on Monday.