Avadim Health files for Chapter 11 and agrees ‘stalking horse’ sale

BY Fraser Tennant

Over $100m in debt and unable to turn a profit for years, health products company Avadim Health has filed for Chapter 11 bankruptcy in order to sell its assets and position itself for a “long and prosperous future”.

To facilitate the sale and restructuring, Avadim’s existing lender, Hayfin Capital Management, has entered into a binding stalking horse purchase agreement and committed to provide certain debtor-in-possession (DIP) financing, subject to court approval, to allow Avadim to meet its obligations during the process.

Furthermore, the financing that Hayfin has committed to provide in connection with the Chapter 11 filing, along with Avadim’s cash flow from operations, will provide ample liquidity to operate the business and meet ongoing obligations to customers, vendors and employees through the completion of the sale process.

Avadim has also announced it has retained investment bank SSG Capital Advisors, LLC to initiate a comprehensive marketing of its assets to other potential buyers to ensure it receives the highest and best price.

"Our goal is to pursue a transaction that maximises the value of the company and ensures we have the necessary resources and flexibility to invest in, and grow the business," said Keith Daniels, chief restructuring officer at Avadim. "We will continue to create and market world-class products, including our Theraworx line, that our customers have come to love."

"We are confident this action provides us with the most efficient and effective way to pursue a transaction while at the same time allowing us to address financial challenges and best position the company going forward," he continued. "To be clear, the action has no impact on our day-to-day business or our ability to continue serving our customers."

Based in North Carolina, Avadim Health develops and sells topical products to improve immune health, neuromuscular health and skin barrier health – products that target the institutional care and self-care markets.

Mr Daniels concluded: “We are proud of the important and meaningful work Avadim has done over the years and are committed to ensuring the company has the right resources in place to continue its mission. We are excited about our future."

News: Avadim Health Files Chapter 11 to Put Lenders in Control

Hertz chooses Chapter 11 exit plan

BY Richard Summerfield

Hertz Global Holdings Inc has selected an ‘enhanced’ restructuring offer from a consortium of company bondholders and private equity (PE) investors that have agreed to supply the billions of dollars in equity capital the company requires to exit Chapter 11 bankruptcy protection.

A consortium made up of Centerbridge Partners LP, Warburg Pincus LLC and Dundon Capital Partners LLC has been chosen to sponsor Hertz’s exit from Chapter 11 along with bondholders that agreed to take control of the reorganised company. Hertz remains on track to exit bankruptcy protection in June.

The offer from the PE consortium was chosen ahead of a rival offer from Knighthead Capital Management LLC and Certares Management LLC, according to papers filed in the US Bankruptcy Court in Wilmington, Delaware.

Under the terms of the restructuring deal, the supporting noteholders have given approval for the exchange of their unsecured funded debt claims against the company for approximately 48.2 percent of the equity in the reorganised company, and the right to purchase an additional $1.6bn of equity in the future.

Hertz’s restructuring plan requires the approval of the bankruptcy court and will be subjected to a creditor vote. Hertz said Saturday that more than 85 percent of its unsecured bondholders, the biggest voting class in the bankruptcy, support the proposal backed by Centerbridge, Warburg and Dundon.

“We are pleased to be moving forward with an enhanced proposal supported by our largest creditor constituency and that delivers excellent value to all our stakeholders,” said Paul Stone, president and chief executive of Hertz. “This plan accomplishes all the goals we set out to achieve through our financial restructuring. Our new sponsors combined with our strong leadership team will bring significant operational experience across fleet financing and management, which will benefit all of our stakeholders. We look forward to emerging from Chapter 11 in the second quarter financially and operationally stronger, and well-positioned to achieve the opportunities in the rebounding travel market.”

Last week, Hertz Global Holdings completed the $850m sale of Donlen Corp, which it operated as a wholly-owned subsidiary for nearly a decade. Under the terms of that deal, Athene Holding Ltd paid $891m in cash for Donlen, a business which Hertz acquired for $250m in September 2011.

Hertz filed for bankruptcy protection in May 2020 amid the dramatic downturn in travel during the early stages of the COVID-19 pandemic, which had a significant impact on the car rental business. The company had planned to raise funds by selling stock, but the US Securities and Exchange Commission took issue with that plan.

News: Hertz selects Chapter 11 exit plan backed by Centerbridge, Warburg, Dundon

Speedcast emerges from Chapter 11 under new ownership

BY Fraser Tennant

Having successfully completed its restructuring process, satellite communication provider Speedcast International Limited has emerged from Chapter 11 proceedings under the ownership of private investment firm Centerbridge Partners.

Over the past 12 months, Speedcast has taken steps to reduce its cost structure and strengthen its operations. Furthermore, the company plans to transform its business and help customers evolve what their remote operations can achieve with fully connected systems that harness future-ready technologies and applications.

As part of this transformation, Speedcast will also integrate its previous mobility networks with a comprehensive, unified global platform capable of supporting the most demanding customer operations and digitalisation requirements.

“We are pleased to have reached the completion of this process which is the culmination of a lot of hard work from our entire team,” said Joe Spytek, chief executive of Speedcast. “I’m eager to work with Centerbridge to position the business for success and give our customers the tools to advance the performance of their operations in today’s changing market landscape.”

Following Centerbridge’s $500m equity investment in the company, Speedcast now has a clean balance sheet with no secured debt and a healthy cash balance, optimally positioning it as a stable, long-term partner for its employees, customers and vendors.

“We look forward to supporting Speedcast’s management team in building upon the company’s strong foundation to realise the growth opportunities that exist as they move forward,” said Jared Hendricks, senior managing director at Centerbridge. “We are excited to work together to help Speedcast further strengthen its service offerings to ensure the company is poised to thrive.”

Speedcast filed for Chapter 11 in July 2020, citing significant industry pressures, as well the global impact of coronavirus (COVID-19) pandemic –  dynamics that made it impossible for the company to complete its planned equity raise.

Founded in 1989, Speedcast is the world’s largest remote communications and IT services provider. Serving more than 3200 customers in over 140 countries, the company has a strong customer focus and a strong safety culture.

Mr Spytek concluded: “I especially want to thank our customers and partners who extended us their trust as we completed our restructuring, and our employees for their dedication to supporting client operations throughout this process.”

News: Speedcast emerges from Chapter 11 bankruptcy debt free

One day: Belk exits Chapter 11 – 24 hours after filing

BY Fraser Tennant

One day after filing for Chapter 11 bankruptcy, department store chain Belk has successfully completed its financial restructuring – finalising an expedited pre-packaged reorganisation to emerge well-positioned for long-term growth.

Belk's reorganisation plan received nearly unanimous support from majority owner Sycamore Partners and lenders, including KKR Credit and Blackstone Credit, and provides for suppliers and landlords to be paid in full as normal operations continue at all store locations and on Belk's e-commerce platform.

"We are pleased to have received nearly unanimous support from all of our stakeholders to complete this restructuring in just one day, positioning us to pursue our growth initiatives and move the company forward from a strengthened financial foundation," said Lisa Harper, chief executive of Belk. "We are immensely grateful for our loyal customers, dedicated associates, and supportive vendor partners who enabled us to complete this restructuring efficiently, without delay or disruption.”

As a result of the Chapter 11 restructuring, Belk has received $225m of new capital, significantly reduced its debt by approximately $450m and extended maturities on all term loans to July 2025. The infusion of cash and reduction in debt provides Belk with increased liquidity to focus on its key initiatives for growth, including further enhancements to its omnichannel capabilities and the expansion of merchandise offerings into new, relevant product categories.

"I want to congratulate the team at Belk for its impressive transformation from a traditional department store business into a full omni retailer," adds Stefan Kaluzny, managing director of Sycamore Partners. "The company has tripled its web business and currently fulfils over 70 percent of its web orders from its stores, providing a nimble and scalable platform for expansion. It has been a remarkable undertaking in a very challenging macro environment."

Privately-owned, Charlotte-based Belk opened its first store in 1888 and currently serves customers at nearly 300 stores in 16 south-eastern states.

Ms Harper concluded: “Belk has a bright future ahead, and I am looking forward to growing our more than 130-year legacy as a trusted retailer for many years to come.”

News: Belk OK'd to exit bankruptcy less than 24 hours after it filed

Power provider Frontera to restructure under Chapter 11

BY Fraser Tennant 

In a move to reduce its approximated £800m debt, natural gas plant operator Frontera Holdings LLC has filed for Chapter 11 bankruptcy protection in order to implement a comprehensive restructuring support agreement (RSA).

Frontera joins an expanding list of operators, which includes California Resources and a pair of natural-gas-fired power plants owned by Talen Energy Corporation, seeking Chapter 11.

Under the terms of the RSA, most of the company's debt will be converted into equity and the current term loan and revolving credit facility lenders will become the new owners of Frontera.  

Throughout the restructuring process and beyond, Frontera expects that employees and vendors will continue to be paid and that the Frontera Generation Facility – the company’s 526MW, combined-cycle natural gas plant near Mission, Texas, which exports power to Mexico – will continue to generate electricity and serve its customers.

Frontera’s subsidiary entities in Mexico are not included in the Chapter 11 filing and also are continuing to operate in the ordinary course of business.

In bankruptcy court filings, Frontera attributed its Chapter 11 filing and RSA to the coronavirus (COVID-19) pandemic's massive disruption to demand for the debtors' energy production.

“These actions represent an important milestone to reducing debt and strengthening the company for the benefit of our stakeholders,” said Lee Davis, chief executive of Frontera. “Frontera intends to use the court-supervised process to create a sustainable capital structure and position the company to achieve long-term success.”

Currently, Frontera has $773m in debt under a secured term loan and revolving credit facility, as well as $171m in secured notes. Under this agreement, lenders agree to convert a substantial portion of the current term loan and revolving credit facility debt into equity. Once approved by the Bankruptcy Court, these lenders will become the company’s new owners.

Furthermore, Frontera has secured $70m in debtor-in-possession (DIP) financing to ensure liquidity throughout the Chapter 11 process. The company's liquidity position will allow the Frontera Generation Facility to operate the business in the ordinary course and fund Chapter 11 administrative costs.

The DIP financing is part of $145m in exit financing that will be provided by lenders upon Frontera’s emergence from the Chapter 11 process.

News: Frontera Holdings Files for Chapter 11 in Southern Texas Court