Gordian’s work on behalf of the Sponsor allowed it to preserve meaningful option value through the implementation of a plan of reorganization that saw a significant deleveraging, rather than a 363 sale that would have resulted in no recovery.
Case Study
ModSpace
CLIENT: ModSpace
Services
Restructuring & Debt AdvisoryBusiness Profiles
Situation
The Company was a leading provider of industrial rental units in North America with significant exposure to the oil & gas industry, especially in Canada.
Engagement
Following the precipitous decline in fossil fuel prices in 2015, the Company’s financial performance meaningfully deteriorated, leaving it with LTM leverage of approximately 10x.
Following a failed merger transaction in the summer of 2016, the Company faced an impending maturity of its $1 billion ABL facility and its junior notes traded at under 35 cents on the dollar.
Gordian was engaged by the financial sponsor to the Company to provide advice in connection with the impending maturity and expected restructuring negotiations between the sponsor, secured lenders, and junior noteholders, which included a diverse group of holders (distressed funds, mutual funds, insurance companies). The noteholders were pushing the Company for a 363 sale process that would see it take over 100% of the Company’s common equity and completely wipeout the sponsor.
Outcome
Following several months of negotiations with the junior noteholders that began with them offering the sponsor nothing more than releases as part of a pre-packaged Chapter 11 filing, Gordian was able to negotiate an outcome that saw the noteholders convert 100% of their claims into equity.
The sponsors retained 7% of the common stock and warrants for an additional 12.5% (prior to a rights offering) in a significantly deleveraged business.