Talking Debt with GLAS
In the wake of some notable high profile failures of PIK notes in debt restructurings following the financial crisis, arrangements combining a variety of debt and equity-like characteristics have been re-emerging with a variety of features which make these more attractive to companies and investors alike. This article focuses on the increasing trend for innovative uses of PIK notes in such financing arrangements.
The use of company voluntary arrangements and court sanctioned schemes of arrangement as tools to restructure the debts of a company in financial difficulties has continued to increase in popularity in recent times, particularly in the retail sector, as an alternative to formal insolvency procedures, with the aim of generating better financial outcomes for the company in question and its creditors.
Following a strategic review, the restructuring and asset sale of British newspaper group Johnston Press PLC and its subsidiaries (the “Group”) to JPI Media (“JPI”) (a newly incorporated newco) was implemented by way of a pre-pack administration (a “Pre-Pack”) in November 2018.
GLAS acts as agent and security trustee on S&G’s new facility lines in both Australia and the UK. GLAS also acts as note trustee, registrar and paying agent on S&G’s new UK convertible note facility alongside its role as equity registrar for S&G UK’s lender shareholders.
Reviewing the latest list of LMA members, the prevalence of third party service providers cannot be ignored. The benefits of the independent loan agent may have first been recognised as a result of the global financial crisis. As is well known, high levels of distressed debt gave rise to conflict issues between deal parties. In some circumstances, given their nature, large lending institutions were unable to take swift and cooperative action to the deal parties satisfaction.
