Gordian Group advised the Company in connection with the successful sale of the Company through a bankruptcy plan of reorganization, which resulted in significant recoveries to old equity.
Client: Pinnacle Holdings
Situation: Pinnacle leases and maintains space on a portfolio of communications sites primarily composed of towers and rooftops where wireless communication providers can locate antennas and equipment. Since its formation in 1995, Pinnacle expanded rapidly across the U.S. through a program of acquisition in high-growth markets. This resulted in a Net Debt/EBITDA ratio of 11.1x prior to its restructuring. Due to weak financial performance and unpredicted capital needs, Pinnacle violated financial covenants under its senior credit agreement and missed an interest payment on its convertible notes.
Engagement: We were tasked with exploring, under severe time constraints, a variety of alternatives including: (i) raising capital to pay down Pinnacle's credit facility, (ii) development of an internal restructuring or recapitalization, and/or, (iii) exploring potential M&A alternatives with financial and strategic buyers.
Outcome: Working with management and counsel, Gordian was able to successfully recapitalize and restructure Pinnacle through a plan of reorganization under the protection of Chapter 11. The plan of reorganization was funded by: (i) an aggregate equity investment of $205 million from Greenhill and Fortress, and, (ii) a significantly reduced credit facility provided by the existing senior lenders. Pinnacle's senior noteholders received a recovery of 35% through a combination of new common shares and cash. The junior convertible subordinated noteholders received a de minimis recovery through cash and warrants for new common shares. Despite the modest recoveries of subordinated creditors, prior management recovered $46 million and old equity recovered $20 million.