Lighting leader Lumileds files for Chapter 11

November 2022 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

November 2022 Issue

In a bid to emerge from Chapter 11 bankruptcy within approximately 60 days, Netherlands-based lighting company Lumileds Holding BV has entered into a restructuring support agreement (RSA) in a bid to deleverage and strengthen its balance sheet.

To efficiently implement the deleveraging, a narrowly focused prepackaged Chapter 11 plan involving only Lumileds’ US and Dutch entities has commenced in the US Bankruptcy Court for the Southern District of New York.

Lumileds’ European, Asian and other foreign subsidiaries and affiliates are not included in the filing and are unaffected by the Chapter 11 process.

A global leader in original equipment manufacturer (OEM) and aftermarket automotive lighting and accessories, camera flash for mobile devices, and light sources for general illumination, horticulture and human-centric lighting, Lumileds has approximately 7000 employees operating in over 30 countries.

Under the terms of the RSA, existing secured lenders are expected to commit to support, and vote in favour of, a transaction that, when executed, will reduce Lumiled’s funded debt by approximately $1.3bn, from approximately $1.7bn to $400m comprised of takeback debt and post-petition loans, which will be combined into a five-year exit facility.

The RSA also contemplates a commitment from certain of its lenders of up to $275m in debtor-in-possession (DIP) financing, available as part of the Chapter 11 process. Subject to the court’s approval, the DIP financing, together with the company’s available cash reserves and cash provided by operations, is expected to provide sufficient liquidity for Lumileds to continue meeting its ongoing obligations.

Moreover, Lumileds has obtained the necessary support from its lenders to confirm its plan prior to commencing its proceedings and expects to meet the requirements to confirm the plan and quickly emerge from the Chapter 11 process.

“Over the past few years, we have been hard at work transforming our cost structure and innovation pipeline, which has allowed us to capitalise more effectively on future market trends as a leader in the lighting industry,” said Matt Roney, chief executive of Lumileds. “We have proactively taken steps to deleverage our balance sheet given the ongoing challenges presented by global supply constraints, coronavirus (COVID-19)-related issues and the crisis in Ukraine.

“This recapitalisation will enable us to further accelerate our efforts as a market-leading innovator within the specialty lighting industry,” he continued. “We believe that the most effective and efficient way to accomplish this is through a prepackaged Chapter 11 process that will be accompanied by a significant increase in our liquidity position.”

Acting as investment banker for Lumileds is Evercore, with Paul, Weiss, Rifkind, Wharton & Garrison, LLP and Latham & Watkins LLP acting as corporate and restructuring counsel. AlixPartners, LLP is acting as financial adviser. PJT Partners is acting as financial adviser to an ad hoc group of Lumileds’ lenders and Gibson, Dunn & Crutcher LLP is acting as the group’s legal counsel.

“Our number one priority is to deliver never before possible solutions for lighting, safety and wellbeing,” concluded Mr Roney. “This comprehensive liquidity and deleveraging solution will enable us to be an even more attractive and stronger partner as we continue to drive innovation and offer new products and solutions to our customers.”

Fraser Tennant