Springing Maturity Credit Agreement

Issuers are rarely late due to a “technical failure” and one way to avoid a technical failure is an equity cure in which the owner (mainly in the case of an EP owner) adds some capital to “cure” a technical failure (z.B adding 50.0 mm to the LTM-EBITDA to meet the leverage test). If the holders are commercial banks, they focus more on the relationship with the issuer than other holders and are more likely to enter into relatively favourable agreements with issuers. On the other hand, troubled investors are quite aggressive and focus on N-T returns. If the business is put up for sale during a restructuring (in accordance with Section 363), the court first wants to obtain a departure offer (usually from creditors). This offer is called “Stalking Horse” and is used as a ground for the continuation of the auction. PITTSBURGH, June 12, 2020 (GLOBE NEWSWIRE) — GNC Holdings, Inc. (NYSE: GNC), a global health and wellness brand that helps people live well, announced today that it has reached an agreement with the groups of lenders needed to extend the maturities of certain loans. As previously announced, GNC`s b-2 loan, filo loan and revolving credit facility have maturities that were to be due prior to the current changes on May 16, 2020 if certain conditions were not met. Due to the impact of COVID-19 on the business, GNC expected that it would not be able to reduce the stock of convertible bonds to less than $50 million by May 16, which would be necessary to avoid spring maturity.

In the event of an acquisition, more interesting scenarios appear, where the change of control is not a factor (the bonds are already traded beyond 101). In deciding whether the bonds of the acquired business should be exchanged, the purchaser takes into account the following reasons: (a) lower interest rates on outstanding debt, (b) exemption from existing liabilities and (c) the purchaser does not want separate reporting obligations. If the purchaser leaves these obligations in default, it is a good idea to review the purchaser`s credit contract and secured notes agreements to see what these acquired credit obligations can become and how many new debt securities can be mobilized to obtain the bonds purchased. If the purchaser pays for the acquisition with shares, it is financially neutral, but the payment is in cash, a new leverage must be taken into account. These are much more common for bank debts than for bonds, because (a) bank debt tends to have more alliances, (b) fewer bank debt holders facilitate the agreement, (c) bank debts are generally the highest and are therefore generally more flexible, in exchange for fees.

Our Brands