(Bloomberg) -- Swedish debt collector Intrum AB filed for bankruptcy protection in the US to implement a restructuring deal for its 58.4 billion krona ($5.3 billion) debt pile.
The company filed for Chapter 11 in Texas on Friday, listing assets of between $1 billion and $10 billion against liabilities of the same range in its petition.
Chapter 11 will allow Intrum to implement a restructuring agreement that has the support of more than two thirds of its bondholders and is backed by a majority of its lenders. The company said in a statement Friday it expects to emerge from bankruptcy by year’s end.
In addition to the Chapter 11, Intrum said it intends to complete a Swedish company reorganization during the first quarter of next year to ensure the results of the Chapter 11 process are given equal effect in Sweden.
Intrum’s troubles stem from the financing of nonperforming loans with high-yield bonds when interest rates were near zero. But the increased cost of financing hobbled its business model, forcing the firm into a restructuring with creditors.
The deal envisages the extension of 90% of the nominal value of Intrum bonds due from 2025 onwards by three years. As compensation, bondholders will receive incentive fees and 10% equity in the company. The firm will also sell €526 million ($554 million) of new senior secured bonds, with some of the proceeds used to buy back the exchanged debt.
While the deal has the support of all the revolving credit facility lenders and 82% of the bondholders, there is a group of noteholders opposing the deal.
Creditors holding most of Intrum 2025 notes have been pushing for better terms, arguing that the current plan doesn’t reflect that their bond are first temporally in line of repayment. The company held talks with these creditors to persuade them to get on board, but a deal wasn’t reached.
The case is Intrum AB, 24-90575, US Bankruptcy Court, Southern District of Texas.
--With assistance from Charles Daly, Giulia Morpurgo and Dorothy Ma.
©2024 Bloomberg L.P.