One Call Corporation is a Florida-based private equity-owned (Apax Partners) provider of “cost containment services to the workers’ compensation industry.” It’s a B2B service in that its clients are payors, i.e., insurers. The company formed in 2013 after Apax Partners acquired One Call Care Management, the predecessor entity, from private equity firm Odyssey Investment Partners (terms undisclosed) and contemporaneously acquired Align Networks from growth equity firm General Atlantic and The Riverside Company and merged the two together to form Once Call Corporation.

We bet you’re wondering: how complex can a workers’ comp solutions provider really be? We mean…this has to be the least sexy business ever. That said, we’re glad you asked. This company has a stupefying amount of debt on its balance sheet! $2b, in fact. You really have to love private equity.

You also have to really love poop-frosted layer cake capital structures:

• $56.6mm ‘22 revolver;

• $842.6mm ‘22 L+5.25% Term Loan B;

• $37.9mm ‘20 L+4% Term Loan B

• $343mm ‘24 7.5%/11% PIK new first lien toggle notes;

• $349mm ‘20 L+3.75%/6% PIK 1.5 first lien term loan (KKR, GSO Capital Markets);

• $94.7mm ‘24 7.5% first lien notes;* and

• $291mm ‘24 10% second lien notes.*

You get all of that? This may be the first time a capital structure for a company single-handedly put us across our newsletter length limitations. Sheesh that’s a lot of debt. And this is after an exchange transaction earlier this year in which the two tranches above with asterisks were (clearly not wholly) exchanged for the $343mm PIK toggle notes. That transaction — and, no doubt, all the fees that came with it — bought the company…

…a rather insignificant amount of time, it seems. The company’s performance apparently cannot sustain that much debt. Per Bloomberg:

Cash has been running short at One Call, which recently drew $50 million from its $56.6 million revolver…. Leverage was around 6.95 times earnings at mid-year, bumping up against the 7-times limit in its lender agreement….

So, the company has covenant issues and a lack of liquidity. It therefore failed to make an interest payment on the $291mm second lien notes on October 1 and it’s now operating amidst a customary 30-day grace period. No cash and little covenant room = no bueno. But, you know what it does have? A blog. That’s right, a blog. And the company is a prolific poster:

For the past couple of weeks, we have been engaging with our lenders on a comprehensive solution that will ensure One Call has an appropriate capital structure to support our long-term business objectives. As these constructive discussions continue, we decided to take advantage of an available grace period for making an interest payment due October 1 under the terms of one of our debt agreements. This grace period, which is fairly standard, allows us to defer this payment for 30 days – without constituting an event of default – while we work together on a solution.

S&P promptly downgraded the company to CC from CCC and put it on CreditWatch.

Per Bloomberg, negotiations are ongoing as to how the capital structure will be dealt with. Suffice it to say, this sucker will file for bankruptcy. And they’ll likely try and make quick work of it. We can’t wait to see how the company manufactures venue in White Plains given that its legal and restructuring advisory professionals are the same dynamic duo from FullBeauty, Sungard and Deluxe Entertainment. Lately, with these characters, “quick work of it” is a matter of relative degree.