(Bloomberg) -- Swedish debt collector Intrum AB has reached an agreement with a majority of its bondholders to address its €5.4 billion ($5.8 billion) debt pile, including a forced loss on credit investors and pushing out the notes’ maturities.
As part of the deal, the company’s existing unsecured notes will be exchanged into four series of new bonds with maturities between 2027 and 2030, but only at 90% of their original value, according to a statement on Thursday. In exchange for the haircut, bondholders will get 10% of Intrum’s equity. The company said it will also sell €526 million of new senior secured bonds, some of the proceeds of which will be used to buy back the exchanged debt.
The plan will enable Intrum to “significantly reduce leverage, extend maturities, and support long term sustainable growth,” the company said. Talks to extend the maturity of its revolving credit facility continue with lenders, it added.
Shares in the debt collector gained as much as 7.2% when trading started in the Swedish capital on Thursday. They were up 5.3% at 9:51 a.m. Stockholm time.
So far, noteholders holding more than 50.1% of its senior unsecured notes and MTNs due 2025–2028 have signed the binding lock-up agreement. The company is now seeking support from other bondholders.
While a consensual transaction would require 90% of the bondholders to agree, the implementation could also go through a court process that requires lower thresholds, such as a UK scheme of arrangement, which needs 75%, or a US Chapter 11 or Swedish process, which only require 66%.
Balance Sheet
Intrum hired Houlihan Lokey Inc. and Milbank LLP in March to find a fix for its balance sheet, after years of borrowing heavily in the low-interest era to buy portfolios. That strategy became unsustainable with higher borrowing costs and a slowdown in its business.
The bondholders that have been leading the discussions with the company include Davidson Kempner Capital Management LP, BlackRock Inc., H.I.G. Capital, Mandatum Asset Management, Capital Four, Intermediate Capital Group Plc and Spiltan Fonder. They have been advised by PJT Partners and Latham & Watkins.
The company chose this deal after exploring other alternatives to fix its capital structure. It had also been in discussions with a separate group of bondholders advised by Lazard and Weil Gotshal with a concentration of holdings in the notes with short-dated maturities.
Here are some details of the transaction:
--With assistance from Charles Daly.
(Updates from fourth paragraph.)
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