(Bloomberg) -- LaserShip Inc., a struggling package-delivery company owned by private equity firm American Securities, may seek to raise cash by borrowing against assets that have already been used as collateral for other loans, according to people familiar with the matter.
The step, if taken, would make it the latest distressed company to utilize the tactic, which typically draws the ire of existing creditors because it erodes their claim to the assets if the company goes bankrupt. The threat of that alone can also strengthen a company’s hand in negotiations with creditors.
The company’s adviser, Evercore Inc., has been reaching out to new investors to gauge interest in a $350 million to $450 million loan that would be secured by assets transfered to a newly created legal entity, said the people, who asked not to identified because discussions are private. The assets are tied to OnTrac Logistics Inc., an entity the company acquired.
LaserShip is also in talks with its current creditors about restructuring its debt, people familiar with the matter said. PJT Partners and Gibson Dunn & Crutcher are advising lenders.
A representative with American Securities declined to comment, while messages left with the company, Evercore and Gibson Dunn were not returned. PJT declined to comment.
American Securities acquired the Vienna, Virginia-based LaserShip and merged it with another parcel company, OnTrac, in 2021 to expand its national reach. Rebranded as OnTrac, it handles package delivery for retailers like Temu and Shein, a clothing company. But it has been dealing with mounting losses due to heightened industry competition and high costs, increasing the risk that it may default on its debt.
On Tuesday, S&P Global Ratings reduced its outlook on LaserShip’s credit rating, which is already deep into junk grade at CCC+, indicating it could be lowered further. It said the company’s losses are making it “vulnerable to a liquidity shortfall, which could lead to a payment default or cause management to consider undertaking a distressed restructuring in the near term.”
Such risk has already dragged down the value of LaserShip’s debt. Its $1.375 billion first-lien term loan maturing in 2028 is quoted around 68.5 cents on the dollar, while its $455 million second-lien loan due in 2029 is quoted at 43 cents, according to data compiled by Bloomberg.
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