RentPath Holdings Inc.

February 12, 2020

RentPath Holdings Inc. and eleven affiliated entities (the “debtors”), a digital marketing solutions enterprise that links property managers with prospective renters to simplify the residential rental experience, filed for bankruptcy in the District of Delaware. The business did $226.7mm of revenue in fiscal 2019 and had EBITDA of $46.8mm.

Where there’s money there’s competition. Where there’s competition, revenue maintenance becomes more challenging. And because of that competition, the debtors were forced to up their marketing spend and promotional activity which dented liquidity. A lack of liquidity presents some really big problems when your annual interest expense is $54.4mm on approximately $700mm of funded debt. For the math challenged, $46.8mm against approximately $700mm of funded debt means that this sucker has a leverage ratio of approximately 15. Or as President Trump would say, “It’s UUUUUUUUUUUGE.” Clearly that is unsustainable AF.

The good news is that the debtors have found themselves a potential buyer, CSGP Holdings LLC, an affiliate of CoStar Group Inc. ($CSGP), which has come forward with a $587.5mm cash bid (plus the assumption of certain liabilities) for the debtors’ assets. The debtors hope to consummate the sale pursuant to a plan of reorganization. To get there and fund the cases in the interim, the debtors obtained a fully-backstopped commitment of $74.1mm in DIP financing from certain members of the crossholder ad hoc committee and other first lien lenders.

• Jurisdiction: (Judge Shannon)

• Capital Structure: $37.95mm First Lien Revolving Facility, $479.75mm First Lien Term Loan, $170mm Second Lien Term Loan

• Professionals:

  • Legal: Weil Gotshal & Manges LLP (Ray Schrock, David Griffiths, Andriana Georgallas, Gaby Smith, Alexander Cohen, Kyle Satterfield, Justin Pitcher, Leslie Liberman, Martha Martir, Richard Slack, Amanda Burns Shulak) & Richards Layton & Finger PA (Daniel DeFrancheschi, Zachary Shapiro)

  • Independent Director: Marc Beilinson, Dhiren Fonseca

  • Financial Advisor: Berkeley Research Group LLC

  • Investment Banker: Moelis & Company (Zul Jamal)

  • Claims Agent: Prime Clerk LLC (*click on the link above for free docket access)

• Other Parties in Interest:

  • DIP Agent & First Lien Agent:

    • Legal: Paul Hastings LLP (Michael Baker, Shekhar Kumar)

  • Successor Second Lien Agent: Wilmington Savings Fund Society FSB

    • Legal: Pryor Cashman LLP (Seth Lieberman, Patrick Sibley, Marie Polito Hofsdal) & Ashby & Geddes PA (William Bowden, Gregory Taylor)

  • Crossholder Ad Hoc Committee

    • Legal: Milbank LLP (Evan Fleck, Nelly Almeida, Andrew Harmeyer) & Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Joseph Barsalona)

  • Second Lien Ad Hoc Committee

    • Legal: Akin Gump Strauss Hauer & Feld LLP (Philip Dublin, Rachel Biblo Block) & Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Joseph Barsalona)

  • Stalking Horse Purchaser: CSGP Holdings LLC (CoStar Group Inc.)

    • Legal: Jones Day (Daniel Moss, Nicholas Morin) & Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill)

  • Large Equityholders: Providence Equity & TPG

    • Legal: Vinson & Elkins LLP (David Meyer)