Undisclosed Media Company

Situation

The Company is one of the largest U.S.-based sponsor-backed companies in its media niche, with an established legacy in certain mainstream industries.  Broad, systemic shifts in audience preferences and viewing habits adversely affected the Company’s core customers, resulting in significant client attrition and a ~70% reduction in EBITDA. In 2017, after delivering notices of default for exceeding permitted leverage ratios, the senior lenders expressed their desire to exit the credit, initiating monetization processes that proved unfruitful. As the situation continued to deteriorate, the lenders demanded increasingly hostile measures.

Engagement

In the absence of a forbearance, the Company engaged Gordian upon receiving threats of imminent liquidation from its senior lenders. Gordian quickly conducted due diligence in order to determine valuation and what—if any—strategic alternatives remained. In our analysis of the credit indentures and operating agreements, Gordian determined that liens on certain of the Company’s assets could be contested and thus substantially reduce potential recoveries to the senior debt, which then compelled the lenders to align their interests with equity in the go-forward operation of the Company in order to mutually maximize value for all stakeholders.

After averting the Company’s liquidation, Gordian negotiated a forbearance while simultaneously embarking on an expedited and highly targeted refinancing process in a search for more amenable lenders. Within one month, Gordian contacted 25 lenders and received three indications of interest that were ultimately leveraged in discussions with the existing lenders for more favorable terms.

Outcome

With Gordian’s guidance, the Company thwarted the senior lenders’ attempted liquidation and negotiated a forbearance with an extended debt maturity and less onerous covenants that provided ample runway for the Company to gain considerable traction in new business wins, enabling further diversification of its client base and advantageously positioning itself for a more timely future monetization event. Our client maintained 100% of its equity stake. Our client maintained 100% of its equity stake and, less than two years later, the Company was sold to a strategic at an extremely advantageous valuation – resulting in a full recovery to the Company’s private equity sponsor of its invested capital.