Winding Up — 9fin’s distressed European weekly

Chris Haffenden
+Bianca Boorer
+ 5 more

22 March 2024•7 min read

9fin’s new newsletter, Winding Up, will incorporate summaries and commentary from 9fin’s European distressed coverage for the past week.

Multiple major developments for stressed and distressed European companies this week created massive trading volatility across names — almost alphabetically — including French software company Atos, global packaging company Ardagh Group, and French telecom giant Altice France — as well as Swedish debt collector Intrum, Grifols and Solocal. Planned asset sales fell through, management teams made public comments that creditors wouldn’t be prioritised with proceeds from previous asset sales, and a flood of financial and legal advisor appointments were announced or reported.

This week’s news

Altice France — After giving creditors an ultimatum on its earnings call this week, Altice France's bonds plummeted across its cap stack. Management announced that creditors will have to participate in discounted transactions if they want to see the estimated €2.1bn proceeds from the data centres and Altice Media unrestricted asset sales. It won’t be lost on creditors that the assets sold were originally inside the restricted group, but moved out prior to the sales. The group’s €1.3bn 8% SUNs due 2027 are the biggest losers, dropping over 40 points in three days to 28-mid. Creditors have reportedly started working with Houlihan Lokey, Milbank, and Gibson Dunn, while the company is talking to Lazard.

Ardagh Group — The global packaging company reportedly hired restructuring advisors, promptly causing a steep sell-off in the name. Creditors were quick to mobilise, with reports of two groups of creditors forming. 9fin reported on the frenzied creditor reaction and considerations following the advisor news.

Atos — The beleaguered French software company lost another potential buyer for its assets this week after Airbusannounced it had pulled out of discussions to buy Atos’ Big Data and Security (BDS) business. A few weeks prior Czech investor Daniel Křetínský’s EP Equity Investment (EPEI) stepped away from talks on the acquisition of Atos’ Tech Foundations. The group’s bonds reacted by diving almost 10 points and the company postponed its earnings call, which was scheduled for Wednesday morning. In the credit default swap (CDS) universe, holders of CDS are waiting for the Credit Derivatives Determinations Committee to decide whether a bankruptcy credit event has occurred. The group is in a mandat ad hoc process to discuss its debt restructuring options with its creditors.

Intrum — Intrum bondholders held pitches this week, 9fin reported, after the company hired its own advisors to address issues with its capital structure. The Swedish debt collector has been facing questions from debt investors, spurred by a recent book sale to Cerberus. Last week, Intrum announced it had hired Houlihan Lokey and Milbank to explore “alternatives…directly addressing its debt structure”.

The company’s options to address its upcoming maturities could lead to different treatment of near-dated debt versus longer-dated bonds and the advisory hire kicked off a wave of speculation on what “alternatives” will entail.

Solocal — 9fin spoke to sources close to French digital marketing firm Solocal’s third restructuring, which could end up being the third cross-class cramdown case in France after Orpea and Casino. Two opposing sides are at loggerheads in their respective competing proposals — on one side is the group’s senior secured bondholders and on the other is Luxembourg-based tech startup Ycor, which is backed by the company and the super senior RCF lenders.

Under the Solocal and RCF-backed proposal, Ycor would take around 76% and RCF lenders would have around 6% of the pro-forma company. The bondholders’ share would drop to around 18% (from around 68.5%) and around 92.9% of the bonds will be equitised, according to 9fin’s calculations. Solocal Group will ask bondholders to vote on the plans at a general meeting in the coming days.

Arvos — The Luxembourg-incorporated industrial equipment and service provider secured sanction of its English scheme of arrangement this week. All of Arvos’ lenders had signed a lock-up agreement to vote in favour of or, in the case of several CLOs in the group’s €417.2m term loan B, abstain from voting against the restructuring.

Loparex — 9fin also reported exclusively this week on how a group of Loparex’s European creditors who were largely cut out of an initial liability management had organised with Dechert to find a way to participate.

The Very Group — Deloitte, auditor to the Barclay brothers-owned online retailer for 11 years, resigned from its role after “difficulties” related to its request for information on entities owned by the wider shareholding group. The Very Group provided the requested information and its accounts were filed on time with an unmodified opinion, the company said in a statement.

Deloitte’s disquiet was tied to concerns over the Barclay family’s finances, a source close to the company said. The family pledged their UK businesses as security for a $1.2bn bailout from UAE fund RedBird IMI that was supposed to give IMI ownership of Barclay-owned newspapers The Daily and Sunday Telegraph and magazine the Spectator. But UK government intervention makes this unlikely.

SBB — SBB’s tender offer brought up questions on its continued liquidity, and 9fin reported on its subsequent financing options. SBB’s voluntary tender offer is for up to €250m across all of SBB’s hybrid and senior unsecured bonds maturing over 2025-2040 with JP Morgan as dealer manager.

Peach Property Group — The German real estate group reported its full-year financial results ending 31 December 2023 on Thursday, 21 March. Despite strong operational figures, Peach Property booked a non-cash valuation loss of €209m due to distress in the German real estate market. Management offered little clarification on how the business will tackle a €594m maturity wall in 2025, but mentioned asset sales, an optimisation of the group’s secured debt profile or lending against €371m of unencumbered assets as possible solutions.

McDermott — The Court of Amsterdam approved the Texas-based energy services company’s Dutch schemes on Thursday, 21 March. McDermott was due before the US courts for a Chapter 15 recognition hearing on Friday, 22 March, according to a proposed agenda.