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Seven Leveraged Loan/High Yield Issuers Join LCD’s Restructuring Watchlist

Seven debt issuers joined LCD’s Restructuring Watchlist last week, bringing the total number of entities on the list to 44.

The Watchlist tracks companies with recent credit defaults or downgrades into junk territory, issuers with debt trading at deeply distressed levels, as well as those that have recently hired restructuring advisors or entered into credit negotiations. It is compiled by LCD’s Matthew Fuller and Rachelle Kakouris.

Joining the Watchlist last week:

  • Communications software concern Avaya , which hired GS and Centerview to address capital structure issues
  • Oil exploration & production co. EXCO Resources, which hired Akin Gump as legal advisor, and said it will retain a financial advisor
  • Halcon Resources, another E&P firm; it inked a restructuring agreement via Chapter 11
  • Luxembourg-based Satellite concern Intelsat, which recently lowered the price on the co.’s bond buyback
  • Internet radio concern iHeartMedia , which is negotiating a debt buyback (and reportedly is hiring advisors)
  • Stone Energy, which skipped a coupon payment
  • Calgary-based oil waste concern Tervita, which deferred an interest payment

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It will be no surprise to learn that, of the 44 issuers on the Watchlist, 18 hail from the energy/O&G sectors, with another three in the mining/commodities space. – Tim Cross

The Restructuring Watchlist is published each week in LCD’s Distressed Weekly. You can follow LCD on Twitter or learn more about us here. LCD is an offering of S&P Global Market Intelligence

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Linn Energy Delisted from NASDAQ; LinnCo Exchange Offer Extended

Linn Energy said yesterday it received notice that it and LinnCo would be delisted from trading on NASDAQ, as of today’s open.

The company said that the two companies are expected to begin trading on the OTC Pink Sheets marketplace today under the symbols LINEQ and LNCOQ, respectively.

Separately, the company also said yesterday it had extended its offer to exchange Linn units for shares in LinnCo, to 12 a.m. EDT on June 30. The terms of the exchange have not changed.

As reported, the exchange offer’s purpose is to permit holders of Linn units to maintain their economic interest in Linn through LinnCo, an entity that is taxed as a corporation, rather than a partnership, which may allow Linn unitholders to avoid future allocations of taxable income and loss, including cancellation of debt income that could result from the Chapter 11.

Roughly 12.07 million shares have been exchanged so far, representing about 69% of Linn Energy’s outstanding units, the company said. — Alan Zimmerman

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This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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Oak Hill Advisors Hires Convery from GreensLedge

Oak Hill Advisors has hired John Convery from GreensLedge Capital Markets to serve as a Managing Director responsible for investment product marketing and client coverage. He will play a role on OHA’s structured products platform.

Convery returns to New York this summer after his previous role as the Head of European Investment Banking at GreensLedge Capital Markets in London focusing on structured credit investment banking.

Before GreensLedge, he was the head of the Global CDO business at Deutsche Bank overseeing origination, structuring, distribution, and servicing institutional clients worldwide. — Andrew Park

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This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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CORE Entertainment files Ch. 11 as American Idol popularity wanes

CORE Entertainment, the owner and producer of American Idol, has filed for bankruptcy as the once-popular television show concluded its final season.

The company’s debt included a $200 million 9% senior secured first-lien term loan due 2017 dating from 2011, and a $160 million 13.5% second-lien term loan due 2018. U.S. Bank replaced Goldman Sachs as agent on both loans, which stem from Apollo’s buyout of the company, formerly known as CKx Entertainment, in 2012.

Principal and interest under the first-lien credit agreement has grown to $209 million, and on the second-lien loan to $189 million, court documents showed.

A group of first-lien lenders consisting of Tennenbaum Capital Partners, Bayside Capital, and Hudson Bay Capital Management have hired Klee, Tuchin, Bogdanoff & Stern and Houlihan Lokey Capital as advisors. Together with Credit Suisse Asset Management and CIT Bank, these lenders hold 64% of the company’s first-lien debt.

Crestview Media Investors, which holds 34.8% of first-lien debt and 79.2% under the second-lien loan, hired Quinn Emanuel Urquhart & Sullivan and Millstein & Co. as advisors.

The debtor also owes $17 million in principal and interest under an 8% senior unsecured promissory note.

CORE Entertainment, and its operating subsidiary Core Media Group, owns stakes in the American Idol television franchise and the So You Think You Can Dance television franchise.

The company’s business model relied upon continued popularity of American Idol and So You Think You Can Dance. In late 2013, the company sold ownership of most of rights to the name and image of boxer Muhammed Ali, and of trademarks to the name and image of Elvis Presley and the operation of Graceland, and failed to acquire assets to offset the loss of that revenue.

The bankruptcy filing was blamed on the cancellation of American Idol by FOX for the 2017 season. Following a decline in ratings, FOX said that the 2016 season would be the show’s final one.

The filing was today in the U.S. Bankruptcy Court for the Southern District of New York. — Abby Latour

Follow Abby on Twitter @abbynyhk for middle market deals, leveraged M&A, BDCs, distressed debt, private equity, and more.

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Swift Energy emerges from Chapter 11

Swift Energy today emerged from Chapter 11, the company announced this morning, adding that it closed on a new $320 million senior secured credit facility in connection with the emergence.

As reported, proceeds of the exit facility were used to repay holders of the company’s prepetition $330 million RBL. The company did not provide further details of the exit facility.

As also reported, the Wilmington, Del., bankruptcy court overseeing the company’s Chapter 11 confirmed the company’s reorganization plan on March 30.

Under the plan, senior notes will be exchanged for about 96% of the reorganized company’s equity, subject to dilution on account of the equitization of the company’s $75 million DIP facility via a rights offering.

According to court documents, the DIP equitization will dilute the distribution to senior noteholders by 75%. Consequently, after giving effect to the rights offering backstop fee of 7.5% of the equity, the final equity distribution to noteholders on account of their claims will be 22.1%, resulting in a recovery rate of 4.6–12.8%, depending upon plan equity value.

At a midpoint value of $680 million, court documents show, the senior notes recovery rate stands at 8.7%.

Existing equityholders retained 4% of the reorganized company’s equity, subject only to a proposed new management-incentive program. In addition, existing equityholders are also to receive warrants for up to 30% of the post-petition equity exercisable upon the company reaching certain benchmarks. — Alan Zimmerman

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Mid-States Supply bought by Staple Street in bankruptcy court sale

Middle-market private equity firm Staple Street Capital has acquired Mid-States Supply Company through a bankruptcy court sale.

The buyer was the stalking-horse bidder in a Section 363 bankruptcy court auction. The purchase price was $25 million in cash, with a negative adjustment for working capital, plus certain liabilities, court documents showed.

The company filed Chapter 11 in February in the Western District of Missouri.

The bankruptcy court documents said Mid-States Supply Company initially owed $45 million under a credit agreement with Wells Fargo dating from 2011, a loan which eventually increased to $60 million. However, this amount had shrunk to $16 million by the time of the asset-sale closing, and was not assumed by the buyer.

SSG Advisors and Frontier Investment Banc Corporation were hired as investment bankers for the sale process.

Kansas City, Mo.–based Mid-States Supply sells pipes, valves, fittings, and controls, and provides related services to the refining, oil-and-gas, and industrial markets.

Staple Street Capital is investing from a $265 million fund, and targets $15–75 million of equity per transaction, aiming at control investments. Founders are Stephen Owens, formerly of the Carlyle Group, and Hootan Yaghoobzadeh, formerly of Cerberus Capital Management. — Abby Latour

Follow Abby on Twitter @abbynyhk for middle-market deals, leveraged M&A, BDCs, distressed debt, private equity, and more.

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Southcross Holdings emerges from Chapter 11

Southcross Holdings, the parent company of Southcross Energy Partners, has emerged from Chapter 11, the company announced yesterday.

As reported, the bankruptcy court overseeing the company’s Chapter 11 on April 11 confirmed the company’s reorganization plan and approved the adequacy of its disclosure statement following a combined hearing.

As also reported, the company filed a prepackaged Chapter 11 on March 28 in Corpus Christi, Texas (see “Southcross Holdings files prepack Ch. 11 with new $170M investment,” LCD News, March 28, 2016). The reorganization plan will result in the elimination of almost $700 million of funded debt and preferred equity obligations, along with a new $170 million equity investment from the company’s existing equity holders, EIG Global Energy Partners and Tailwater Capital.

Among other things, under the company’s contemplated reorganization plan, an $85 million DIP from existing equity holders is to be converted into one-third of the equity of the reorganized company. DIP lenders are also to provide an additional exit investment of $85 million for an additional one-third of the reorganized equity. The company’s term lenders are slated to receive, among other things, the remaining one-third of the reorganized equity. — Alan Zimmerman

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Warren Resources CEO Warns Bankruptcy Could ‘Wipe Out’ 2nd-Lien Leveraged Loan Claims

Warren Resources yesterday warned certain creditors—including those that recently exchanged into the company’s second-lien leveraged loans—that they could see their claims “completely wiped out” if an agreement is not reached on the terms of an out-of-court restructuring

The company also announced CEO James Watt has been appointed to the additional role of chief restructuring officer.

According to a company press release, “the lender under Warren’s first-lien credit facility has made a proposal for a viable post-restructuring capital structure that would be acceptable to Warren because it would result in deleveraging the company by converting a substantial amount of its debt to equity.”

However, an agreement between the company’s first-lien lender, the lender under its second-lien credit facility and holders of more than 95% in principal amount of its unsecured notes, has not been reached.

“The company will continue working with all parties in the hope of accomplishing an out-of-court restructuring,” Watt said. “However, we must make a determination in the very near future as to whether this path is achievable, and if not, we will prepare to complete the restructuring process through a bankruptcy.”

“In my estimation, a bankruptcy proceeding without the consent of both our lenders under our secured credit facilities, and the investors in our unsecured notes, will likely result in holders of our unsecured notes, and even our second-lien lender, having their claims completely wiped out. Nevertheless, we remain hopeful that negotiations among our creditors can result in an expeditious solution that maximizes preservation of value for all our stakeholders,” Watt continued.

As reported, the independent oil-and-gas exploration-and-development company elected to defer a $7.5 million interest payment due Feb. 1 on its $167.3 million of 9% senior notes due 2022, despite disclosing that it had sufficient liquidity to make the payment in full. The 30-day grace period for the missed interest payment has since expired, putting the company in default of the unsecured debt obligation and its first- and second-lien credit facilities.

As of March 31, Warren’s first-lien creditors held debt of approximately $235 million in principal amount, second-lien creditors held debt of approximately $52 million in principal amount, and investors held approximately $167 million principal amount of Warren’s unsecured senior notes. The company late last year completed an uptier exchange to swap $63.1 million of its unsecured notes for a $40.1 million second-lien term loan and an additional second-lien loan providing approximately $11 million of new money.

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Templar Energy Defers Interest Payment on 2nd-Lien Leveraged Loan

Templar Energy announced today that it has elected to defer approximately $11.8 million in interest payments due March 21, 2016 on a tranche of its outstanding $1.45 billion principal amount second-lien term loan due Nov. 25, 2020.

The company said in a statement that it has sufficient liquidity to make the interest payments, but it has elected to use the 30-day grace period “as it explores alternatives for improving liquidity and the overall capital structure.”

The covenant-lite second-lien term loan due 2020 (L+750, 1% LIBOR floor), which is quoted at deeply distressed levels, was recently wallowing in the low single digits.

“It is no secret that all oil and gas related companies, whether they are upstream, midstream, or in the service sector of the industry, are challenged by the current, macro-economic environment we find ourselves immersed in,” CEO David Le Norman said. Le Norman further added the company has been working to modify its capital structure “to be better equipped to handle the head winds created by the lower product prices we are receiving.”

The decision to enter into the grace period does not constitute an event of default under the terms of the company’s credit agreements, Templar said.

Templar last tapped the market in September 2014 for a $550 million fungible add-on to its second-lien term loan, which was issued at 97. Proceeds from the incremental loan were earmarked to help finance the company’s planned $588 million purchase of the Granite Wash assets from Newfield Exploration. With the add-on, the loan grew to about $1.45 billion.

Templar is rated CCC–/Ca. The term loan, which sits behind a reserve-based revolver, is rated CC/Ca, with a 5 recovery rating from S&P.

As of Sept. 30, the company had $450 million drawn on the reserved-based revolver, with a borrowing base of $560 million, and had $26 million of cash on hand.

Oklahoma City–based Templar Energy is an exploration-and-production company formed by First Reserve in late 2012.Staff reports

This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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Alta Mesa Taps Remainder of Revolving Loan After Scrapping Debt Swap Deal

Alta Mesa Holdings has drawn the remaining $141.9 million available under its revolving credit facility. Borrowings under the revolver due October 2017 now totals $300 million, including $6 million of outstanding letters of credit. Wells Fargo Bank is administrative agent.

The draw-down follows the company’s announcement earlier this month that it canceled its distressed exchange offer to swap out its $450 million of 9.25% senior notes due 2018 for new, higher-priority 10.625% senior secured third-lien term loans due 2021 at a significant discount to par.

Recall that Alta last month entered into an amendment that increased the leverage ratio under its revolver to 4.5x, from 4x, for the fiscal quarters ending June 30, 2016 and Sept. 30, 2016 and permitted the company to draw the remaining borrowing base availability.

Houston-based Alta Mesa is rated CCC+/Caa1. — Staff reports

This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.

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