Capital Structure: $339mm Tranche A RCF (Bank of America), $150 Tranche A-1 Term Loan, $350mm second lien notes (Wells Fargo Bank NA)
Company Professionals:
Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Kelley Cornish, Elizabeth McColm, Claudia Tobler, Alexander Woolverton, Michael Colarossi, Diane Meyers, Moses Silverman) & Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Sean Greecher, Andrew Magaziner, Elizabeth Justison)
Financial Advisor: AlixPartners LLC (Holly Etlin, Carrianne Basler, Jim Guglielmo, John Creighton, Ben Chesters, Jamie Strohl, Mitch Chubinsky, Thomas Cole, Daniel Law)
Investment Banker: PJT Partners LP (Steven Zelin, James Baird, Jon Walter, Vinit Kothary, Sartag Aujla)
Real Estate Advisor: A&G Realty Partners LLC
Intellectual Property Disposition Consultant: Hilco IP Services (David Peress)
Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
Other Parties in Interest:
Bank of America NA
Legal: Morgan Lewis & Bockius LLP (Julia Frost-Davies, Robert A.J. Barry, Amelia Joiner) & Richards Layton & Finger PA (Mark Collins, Joseph Barsalona)
Second Lien Noteholders: Alden Global, LLC; B. Riley FBR, Inc.; Bennett Management Corporation; Brigade Capital Management, LP; Riva Ridge Master Fund, Ltd.; Cetus Capital LLC; Contrarian Capital Management LLC; and Wolverine Asset Management, LLC
Legal: Jones Day (Bruce Bennett, Joshua Mester, Sidney Levinson, Genna Ghaul, Charles Whittman-Todd) & (local) Cole Schotz PC (Norman Pernick, J. Kate Stickles)
Official Committee of Unsecured Creditors
Legal: Pachulski Stang Ziehl & Jones LLP (Jeffrey Pomerantz, Robert Feinstein, Bradford Sandler)
Financial Advisor: Zolfo Cooper LLC (David MacGreevey)
Prospective Buyer: DW Partners LP
Legal: DLA Piper LLP (Stuart Brown, R. Craig Martin, Jason Angelo, Richard Chesley, John Lyons, Oksana Rosaluk)
2/2/18 Recap: Publicly-traded ($CVO) large envelope and label manufacturer with roots tracing back 100 years filed for bankruptcy. Interestingly, you, our treasured PETITION readers, probably interact with Cenveo's products in your day-to-day life. Cenveo prints comic books you can buy at the bookstore, produces specialized envelopes used by JPMorgan Chase Bank ($JPM) and American Express ($AMEX) to deliver credit card statements, and manufactures point of sale roll receipts used in cash registers and prescription labels found on medication at national pharmacies. Why did it file for bankruptcy? Disruption. And debt. The company notes that its filing was necessary to tame its burdensome funded debt and corresponding annual $99.4mm debt payments (inclusive of cash and "principle" payments). In light of its leverage, the company apparently also suffered from other pressures on the business, including restrictive trade terms and/or the departure of business from vendors. But, wait! There's more. And its textbook disruption. Per the company, "In addition to Cenveo’s leverage issues, macroeconomic factors, including the introduction of new e-commerce, digital substitution for products, and other technologies, are transforming the industry. Consumers increasingly use the internet and other electronic media to purchase goods and services, pay bills, and obtain electronic versions of printed materials. Moreover, advertisers increasingly use the internet and other electronic media for targeted campaigns directed at specific consumer segments rather than mail campaigns." Ouch. To put it simply, every single time you opt-in for an electronic bank statement, you're f*cking over Cenveo. More from the company, "As society has become increasingly dependent on digital technology products such as laptops, smartphones, and tablet computers, spending on advertising and magazine circulation has eroded, resulting in an overall decline in the demand for paper products, and in-turn lowering reliance on certain of Cenveo’s print marketing business. In addition, there is generally a decline in supply of paper products in the industry, such that only a handful of paper mills control the majority of the paper supply. As a result, paper mills and other vendors that sell paper products have a large amount of leverage over their customers, including Cenveo. The overall decline in the paper industry combined with the diminished supply in paper products has led to overall decline in the industry, dramatically impacting Cenveo’s revenues." Consequently, the company has spent years trying to streamline operations and cut costs: it is not entirely clear from the company's filing, but this disruption clearly led to the "downsizing [of] its workforce," a reduction in its geographic footprint, and asset dispositions. But, ultimately, earnings couldn't manage the balance sheet. The company engaged its various parties in interest and was able to secure a (shaky?) restructuring support agreement and a commitment of financing in the amount of a $190 million ABL DIP Facility provided by the Prepetition ABL Lenders and a new $100 million DIP Term Facility backstopped by more than a majority of the holders of First Lien Notes. It will need to address its underfunded pensions (approximately $92.9mm).
Jurisdiction: S.D. of New York
Capital Structure: see below.
Company Professionals:
Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Jonathan Henes, Joshua Sussberg, Michael Slade, Gregory Pesce, Melissa Koss, George Klidonas, Natasha Hwangpo)
Financial Advisor: Zolfo Cooper LLC (Eric Koza)
Investment Banker: Rothschild Inc. (Neil Augustine, Dan Skolds, Matthew Chou, Philip Engel, Daniel Flanary, Thomas Galluccio, Trip Burke, Farhat Suvhanov)
Real Estate Consultants: VanRock Real Estate Consulting LLC
Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
New Independent Director: Eugene Davis
Other Parties in Interest:
Prepetition ABL Agent; $190mm ABL DIP Facility Agent: Bank of America NA
$100mm DIP Term Facility Agent: Wilmington Savings Fund Society FSB
FILO Notes Trustee/First Lien Notes Trustee/Second Lien Notes Trustee/Unsecured Notes Trustee: Bank of New York Mellon
12/17/17 Recap: Singapore-based provider of semiconductor assembly and test services for integrated circuits for use in analog, mixed-signal and logic, and memory products across the globe filed for prepackaged bankruptcy...finally. The company had skipped its $56mm interest payment and let its 30-day grace period expire; it has also been the subject of litigation after issuing new notes back in 2014 in exchange for junior debt. The company blames the litigation, an over-levered balance sheet, underspending on capex, and liquidity constraints for its need to reorganize. The company seeks to confirm the case in FOUR DAYS which may be a new record for a bankruptcy of this size.
Jurisdiction: S.D. of New York (Judge Drain)
Capital Structure: $1.13b 10% '19 first lien notes ($625mm Initial Nots, $502mm Additional Notes)(Citicorp International Limited)
Company Professionals:
Legal: Kirkland & Ellis LLP (Marc Kieselstein, Patrick Nash, Gregory Pesce, Michael Slade)
Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
Other Parties in Interest:
Ad Hoc Group of Initial Senior Secured Noteholders (GSO Capital Partners LP, IP All Seasons Asian Credit Fund, Brigade Capital Management LP, Southpaw Credit Opportunity Master Fund LP)
Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Abhilash Raval, Brian Kinney, Michael Price)
Financial Advisor: PJT Partners LP
Ad Hoc Committee of Additional Senior Secured Noteholders (Taconic Capital Advisors LP, Marble Ridge Master Fund LP, KLS Diversified Asset Management)
Legal: Dechert LLP (Michael Sage, Brian Greer, Janet Doherty)
Ad Hoc Committee of Additional Senior Secured Noteholders
Legal: Ropes & Gray LLP (Gregg Galardi, Stephen Moeller-Sally, Daniel Anderson)
TPG
Legal: Cleary Gottlieb Steen & Hamilton LLP (James Bromley, Benjamin Beller)
11/29/17 Recap: It has become routine for a company to tout the synergistic benefits of an acquisition. But synergies only come from solid execution and integration of the new properties into the existing franchise. As we often see, that's a pipe dream that often fails to come to fruition. Take, Cumulus Media, for instance, which from 1998 through 2013, "completed approximately $5 billion worth of acquisitions to grow its network and station businesses," including two large recent acquisitions (Citadel Broadcasting in 2011 and Westwood One in 2013). Notably, "[t]he Company struggled to develop the management and technology infrastructure required to integrate the acquired assets and to support and manage its expanding portfolio. Additionally, certain of the acquisition projections proved erroneous and a number of subsequent management decisions failed to achieve their desired results. The Company was thus unable to achieve the cash flow projections it had made to support the prices paid for those acquisitions...." Projections didn't translate to reality? Color us shocked. Combine these operational challenges with "industry challenges" and you've got a recipe for decreased YOY trends in ratings, revenue and EBITDA. Since 2012. Yikes. But like most bankruptcies, this is a storm of multiple elements. Clearly, the above-noted transactions led to a tremendous amount of incurred debt, capex for integration, and interest expense on that debt. But, in addition, "advertiser and listener demand for radio overall has been negatively impacted by the availability of content and advertising opportunities in growing digital streaming and web-based digital formats, resulting in declines in radio industry revenue and listenership. As a result of these general industry pressures, high acquisition prices and subsequent poor performance, Cumulus Media found itself with an excessive level of debt relative to its earnings and rapidly approaching maturities on its funded debt." So, in other words, blame the debt, Facebook ($FB), Google ($GOOGL), Netflix ($NFLX), Amazon ($AMZN), podcasts, etc., for the decline in radio consumption. So, now the company is in bankruptcy with a restructuring support agreement in place to equitize the term loan. The term loan lenders will get take-back paper and 83.5% percent of the reorganized company. The noteholders will get 16.5% of the equity subject to management incentive plan. Shareholders will get bupkis.
Jurisdiction: S.D. of New York (Judge Chapman)
Capital Structure: $1.73b TL (JP Morgan Chase Bank NA), $637mm 7.75% senior notes (U.S. Bank NA)
Company Professionals:
Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Paul Basta, Lewis Clayton, Jacob Adlerstein, Claudia Tobler)
Financial Advisor: Alvarez & Marsal North America LLC (David Miller)
Investment Banker: PJT Partners LP
Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
Board of Directors: Mary Berner, Jill Bright, Ralph Everett, Jeffrey Marcus, Ross Oliver, Jan Baker
Other Parties in Interest:
Ad Hoc Group of Term Loan Lenders (Eaton Vance Management and Boston Management & Research, Franklin Mutual Advisors, Highland Capital Management LP, JP Morgan Chase Bank NA, Silver Point Finance LLC, Symphony Asset Management LLC and Nuveen Fund Advisors, Voya Investment Management Co. LLC, Beach Point Capital Management LP)
Legal: Arnold & Porter Kaye Scholer LLP (Michael Messersmith, Michael Solow, Seth Kleinman)
Financial Advisor: FTI Consulting LLC
Ad Hoc Senior Noteholder Group (Angelo Gordon & Co. LLP, Brigade Capital Management, Capital Research and Management Co., Greywolf Capital Management LP, Waddell & Reed Investment Corporation)
4/18/17 Recap: Texas-based gas-operated merchant power generator servicing the ERCOT region filed for bankruptcy because demand projections were too robust (in the face of increasing share serviced by alternative energy sources), depressed natural gas prices crushed revenues, and a regulatory attempt to reform to a capacity market failed, among other reasons. The company had been downgraded and operating pursuant to a forbearance with its lenders. Now, the company is in bankruptcy with a restructuring support agreement that outlines the terms of a transaction that will swap the term loan for 100% of the equity in the company. The company will have a $20mm DIP in play to effectuate the transaction.
Jurisdiction: D. of Delaware
Capital Structure: $398.7mm funded '22 first lien TL (inclusive of LOC and RCF - Wilmington Trust, NA)
Company Professionals:
Legal: Latham & Watkins LLP (Keith Simon, Annemarie Reilly, Marc Zelina) & (local) Richards Layton & Finger (John Knight, Paul Heath, Brendan Schlauch, Christopher De Lillo)
Investment Banker: Ducera Partners (Mark Davis)
Claims Agent: Prime Clerk LLC (*click on company name for docket)
Other Parties in Interest:
Ad Hoc Group of Term Lenders (Ares Capital Corporation, Avenue Capital Management II LP, Brigade Capital Management LP, Canaras Capital Management, GSO Capital Partners LP, H.I.G. WhiteHorse Capital LLC, Lord Abbett & Co. LLC, MJX Asset Management LLC, Oaktree Capital Management LP, Siemens Financial Services Inc., SOF-X Credit Holdings LLC (Starwood Credit Advisors LLC), Western Asset Management Company)
Legal: Stroock Stroock & Lavan LLP (Jayme Goldstein, Jonathan Canfield, Joanne Lau) & (local) Young Conaway & Stargatt LLP (Edmon Morton, Matthew Lunn, Ashley Jacobs)
Financial Advisor: Houlihan Lokey
3M Employee Retirement Income Plan Trust
Legal: Blank Rome LLP (Jeffrey Rhodes, Ira Herman, Stanley Tarr)
