72 International Financing Review March 21 2020and has signed a restructuring support
agreement with an ad hoc group of lenders to
reorganise the company’s debt and provide
53MûDEBTOR
IN
POSSESSIONûlNANCING
The US$75m DIP is structured as a delayed-
draw term loan comprising US$70m in new
money and a US$5m bridge loan.
The DIP is priced at 1000bp over Libor,
WITHûAûûmOORû)TûWILLûCONVERTûINTOûAûNEWû
term loan facility when the company
emerges from bankruptcy and mature
three years from the emergence date.
The lenders will also provide a
US$225m post-petition term loan facility
upon the company’s exit from
bankruptcy.
4HEû53MûLOAN ûWHICHûMATURESûlVEû
years from Internap’s emergence date,
will be priced at 650bp over Libor. The
company has the option of paying 300bp
in cash and 350bp paid in kind, but only if
its board of directors allow for 200bp of
the 300bp of cash interest to be payment-
in-kind when the company emerges from
bankruptcy.
The company will also enter a new
53MûSENIORûSECUREDûlRST
OUTûWORKINGû
capital facility upon its exit from
bankruptcy.
The converted DIP loan remains senior
in priority to the new term loan and the
working capital facility.Internap’s pre-petition debt includes
US$426.4m under its term loan due 2022
and US$30m under its revolving loan due
2021, excluding unpaid fees and interest.
Jefferies is Internap’s largest creditor.
The lender led a repricing in March 2018
of its term loan due 2022.EUROPE/MIDDLE EAST/
AFRICAPIZZAEXPRESS AGREES £70m DEALUK restaurant chain PIZZAEXPRESS has
agreed a £70m three-year super senior
facility term loan with a group of lenders
managed by HPS Investment Partners.
The loan pays a margin of 675bp over
,IBORûSUBJECTûTOûAûûmOORûWITHûANû/)$û
of 2.5% on the total commitments payable
on the closing date of the loan.
The facility will be used to repay the
group’s £20m super senior revolving
credit facility and a £10m super senior
term facility with Hony Capital, which
mature in August.
It will also be used for general corporate
and working capital purposes.
The RCF was put in place in 2014 via
Bank of China, Deutsche Bank, Goldman
Sachs and JP Morgan alongside £610m ofHIGH
YIELDûBONDSûTOûlNANCEû(ONYSûBUYOUTû
of the company in 2014.
4HEûNEWûFACILITYûCANûNOTûBEûRElNANCEDûONCEûITû
is repaid. It will be guaranteed by PizzaExpress
and it will rank senior to the company’s 6.625%
senior secured notes due 2021.
There will be certain agreements in the
facility that will enable the group to carry
OUTûRElNANCINGSûORûRESTRUCTURINGSûOFûITSû
senior secured notes and the senior
unsecured notes if necessary.
The loan will also include a single
MAINTENANCEûlNANCIALûCOVENANTûREQUIRINGû
PizzaExpress to comply with a minimum
LTM Ebitda covenant tested quarterly
within 60 days of quarter-end and set at a
level of £40m for the life of the facility.
PizzaExpress could be facing a
restructuring after challenging trading
conditions and rising costs hit
PROlTABILITY
Houlihan Lokey and Kirkland & Ellis are
advising PizzaExpress in connection with
the super senior facility.
)Nû*ULYûû#HINESEûPRIVATEûEQUITYûlRMû
Hony Capital struck a deal with Gondola
Group to buy PizzaExpress for about
£900m.
Private equity fund Cinven bought
PizzaExpress franchise owner Gondola in
2007 in a €1.3bn public-to-private
transaction.Virus set to take down zombie firms
EUROPE PE firms looking at which portfolio companies they will continue to supportThe coronavirus claimed its first high street
victim on Monday, when UK retailer LAURA
ASHLEY appointed administrators citing the
outbreak, and it is expected to take down several
more so-called “zombie” companies.
Zombie companies are mainly mid-market
businesses, many in the retail sector, that have
been surviving on low interest rates and a lack of
financial triggers to push them over the edge.
However, the spread of the coronavirus
has transformed the landscape and now
companies already under stress will begin to fail,
restructuring advisers say.
“If the quality of a business is already
questionable then in the current environment it
needs to get killed,” one adviser said.
Private equity firms are starting to look closely
at their portfolios and deciding which ones they
are going to continue to support and those they
are prepared to see fail.
Some businesses will get new money
supported by a haircut from creditors, some
will be taken over by creditors that will provide
liquidity to keep them afloat, and others will be
liquidated.“We are talking to sponsors. They are
assessing whole portfolios and deciding which
companies they will support. It’s like playing
triage with businesses – there will be collateral
damage; you can’t save them all,” another
restructuring adviser said.TRICKY CALL
Agreeing any sort of debt restructuring for
companies that their sponsors are no longer willing
to support could be difficult. With little visibility
over future performance, many banks will neither
want to take control nor inject cash or agree debt
haircuts, which could lead to more casualties.
“The road will not be littered with
enforcements, but it would be rash for banks to
accept haircuts in the current climate. You can’t
predict what cashflows will be like after this is
over so there is no way to accurately predict the
value of the business,” a third adviser said.
Moody’s list of companies rated B3-PD
negative had 60 companies on it at the end of
2019, 54% higher than at the end of 2018.
One of them, BC Partners-owned Spanish
bridal company PRONOVIAS, has seen its loansfall substantially on Europe’s secondary market
over the last month. A €154m tranche of the
company’s €215m term loan B was trading at
57.5% of face value on March 17, down from
70.2% on March 4 and 80.3% on February 4,
according to Refinitiv LPC data.
Pronovias’ loans have been falling in secondary
over the last year, from 92.6% on March 5 2019,
prompted by negative sentiment for the retail
sector and a downgrade by Moody’s in December.
Advisers are unsure if it can survive the
present environment: “Pronovias is on our watch
list,” the second adviser said.
Loans for other names on Moody’s B3-PD
negative and lower rated list have also been
falling in the secondary market over the past
month.
These include a £450m term loan for health
retailer HOLLAND & BARRETT UK, which fell to
58.3% of face value on March 17 from 67.8%
on March 3, and a €450m term loan for French
digital media company TECHNICOLOR that fell
to 75% of face value on March 17 from 86% on
March 3.
Sandrine Bradley9 IFR Loans 2325 p 55 - XX.indd 72 20 / 03 / 2020 19 : 00 : 40