Transactions
& Case Studies

Displaying: Recapitalization & Restructuring

December 2015


$4.2 billion

Chapter 11 Reorganization
Exclusive Financial Advisor to LightSquared Inc. on its $4.2 billion Chapter 11 Reorganization

On December 7, 2015, LightSquared Inc. successfully consummated its Chapter 11 Plan of Reorganization (the “Plan”), which was the culmination of extensive negotiations and litigation among the major constituents in the Chapter 11 case. Prior to the Chapter 11 filing, Moelis & Company pursued an exhaustive strategic and financial investor process to find the right solution for its client and led intensive negotiations to execute an out-of-court restructuring. Due to the opposition of several large holders, LightSquared was forced to file for Chapter 11 to maintain control over its assets.

When LightSquared set out to launch a nationwide, wholesale wireless LTE network, federal regulators denied attempts to clear the Plan, citing concerns about potential GPS interference. As a result, LightSquared was forced to file for Chapter 11 protection in May 2012 with $2.3 billion of debt. Moelis & Company was hired as the exclusive financial advisor to the company, and ran extensive multi-party negotiations over more than three years, evaluating over a dozen plans of reorganization filed with the U.S. Bankruptcy Court.

These extensive discussions resulted in a near-fully consensual plan of reorganization, offering full recovery to all existing debt and preferred equity holders. Moelis & Company also evaluated and assisted in the raising of over $3.5 billion of new debt and equity capital, numerous rounds of DIP financings, and served a critical role in a seven-month mediation process. Moelis & Company provided an expert valuation report as well as extensive trial testimony in support of the Plan and related financings that served as the centerpiece of the Plan confirmation. Additionally, the Firm submitted at least three formal valuation reports and provided testimony in support of multiple Plan proposals and deposition testimony on a number of matters at least nine times during the course of the Chapter 11 proceedings.

LightSquared pursued the confirmed Plan in partnership with an investor group, including Fortress Credit Opportunities Advisors LLC, Centerbridge Partners, L.P., JPMorgan Chase & Co., and Harbinger Capital Partners LLC. Among other features, the Plan provided for the full satisfaction of all claims and preferred equity interests, $3.5 billion in aggregate new-money debt and equity investments, and the installation of a world-class board of directors chaired by former Verizon Chairman and CEO Ivan Seidenberg.

LightSquared emerged from bankruptcy with $4.6 billion of new and rolled debt financing which provided over $900 million of cash. This allowed the company to pursue alternative investment opportunities and capitalize on its valuable wireless spectrum licenses.

April 2015


£1.0 billion

Restructuring
Exclusive Financial Advisor to the Ad Hoc Committee of Senior Secured Debtholders in Connection with the £1.0 billion Restructuring of Towergate Insurance

On April 7, 2015, Towergate Insurance Limited (“Towergate” or collectively with its subsidiaries the “Group”), the United Kingdom’s largest independently owned general insurance intermediary, announced the completion of its balance sheet restructuring.

Since the Group was formed in 1997, it had grown principally by acquisitions, having purchased over 300 businesses. In 2011, private equity company Advent International acquired a significant equity stake alongside the Group’s founder, Peter Cullum, investing over £200 million with a view to accelerating Towergate’s consolidation strategy. However, a number of commercial, operational and financial issues created an unsustainable situation for the company’s capital structure in 2014; Towergate needed to find a way to restructure negotiations with a disparate group of stakeholders (with competing objectives) while maintaining operational stability.

In November, 2014, Moelis & Company was appointed by a group of the Senior Secured Creditors (SSC) who held roughly 70% of the senior secured debt. Moelis & Company worked with the company and the SSC Ad Hoc Committee (group of 11 key institutions between Europe and the US) to design the Senior-Secured Only solution that formed the basis of the consensual restructuring deal agreed with the Senior Unsecured Creditors. Moelis & Company played a critical role in re-shaping the process in favour of the SSC Ad Hoc Committee, a central group that eventually had the maximum negotiating leverage and drove the transaction.

Moelis & Company achieved a par plus solution for SSC within two months of the Firm’s appointment when debt was trading at 80 pence to the pound. The restructuring significantly delevered the company, reducing total debt by approximately 60% through the effective equitisation of £360 million of debt claims and the provision of £300 million equity contribution. The SSC also fully underwrote new £75 million Super Senior Notes providing Towergate additional liquidity.

The transaction was effected through a ‘dual-track’ UK Scheme of Arrangement with both the SSCs and Senior Unsecured Notes overwhelmingly approving the transaction with 98% and 99% respectively voting in favour.

October 2014


£2.3 billion

Restructuring
Financial Advisor to Angelo Gordon and Co-ordinator of Junior Noteholders in connection with the £2.3 billion Restructuring of Punch Taverns

On October 8, 2014, Punch Taverns plc (“Punch”), the second largest leased pub operator in the UK, successfully completed its restructuring of the Punch A and Punch B securitizations. Significant changes in the commercial environment coupled with an over-levered capital structure drove Punch to initiate a review of its capital structure, ultimately resulting in a comprehensive financial restructuring which created a more robust and sustainable debt structure. The restructuring plan was agreed to by 17 different note tranches and shareholders and achieved strong support from all stakeholders throughout the process, with over 75% voting in approval at each of the meetings. Moelis & Company acted as exclusive financial advisor to Angelo Gordon, the single largest creditor across both Punch securitizations, coordinated the Junior Noteholder group, and played a pivotal role by developing the debt-for-equity proposal which was eventually implemented as part of the restructuring. The transaction represents one of the most high-profile European whole-business securitization restructurings in 2014.

October 2014


$4.2 billion Pre-negotiated Chapter 11 Reorganization; $570 million debt financing; $600 million equity financing

Pre-negotiated Chapter 11 Reorganization, debt financing and equity financing
Financial Advisor to Momentive Performance Materials on its $4.2 billion Pre-negotiated Chapter 11 Reorganization

On October 24, 2014, Momentive Performance Materials (“MPM”), one of the world’s largest producers of silicones, silicone derivatives and quartz products, successfully emerged from Chapter 11 Bankruptcy protection. Moelis & Company acted as financial advisor to MPM and was instrumental in initiating, evaluating and negotiating the transaction. Over the course of an intensive multi-party due diligence period, Moelis & Company evaluated and assisted in the development of the pro forma business plan, negotiated a fully committed equity rights offering and assisted in securing $570 million in DIP financing as well as exit financing at favorable terms. On April 13, 2014,
MPM entered into a Restructuring Support Agreement with holders of $1.3 billion of Second Lien Notes, the fulcrum security, under a pre-negotiated plan, and on September 10, 2014, MPM’s Plan of Reorganization was confirmed. Key terms included a $600 million fully committed rights offering, which was backstopped by approximately 90% of the holders of the Second Lien Notes, along with a 100% recovery to the holders of First Lien Senior Notes and Replacement Notes, trade creditors and other general unsecured creditors.

Moelis & Company played a pivotal role as lead witness in the landmark Bankruptcy Court decision on cram down interest rates based on the Supreme Court’s Till decision, providing expert testimony regarding the appropriate rate for the Replacement Notes. The Court largely found in favor of MPM, saving the estate hundreds of millions of dollars while providing long-term financing to fund its business operations and future growth.

December 2013


£1.5 billion

Recapitalizaton
Exclusive Financial Advisor to the Ad Hoc Committee of Lower Tier 2 Noteholders of The Co-operative Bank on its £1.5 billion recapitalization

On December 20, 2013, Co-operative Group Limited (the “Group”) and The Co-operative Bank p.l.c. (the “Bank”) completed the revised recapitalization plan for the Bank. The plan was announced on November 4, 2013 and included a Liability Management Exercise (the “LME”) structured for the different classes of bondholders and preference shareholders, a capital injection from the Group of £333 million, and a capital raise of £125 million underwritten by the Lower Tier 2 Noteholders (the “LT2 Group”). The plan enables the Bank to continue its unique mission as a UK bank committed to the values and ethics of the co-operative movement. The LME received overwhelming support from bondholders with 97.6% of lower tier 2 security holders and 99.9% of tier 1 and upper tier 2 security holders voting in favor. The recapitalization represents the first successful consensual creditor bank bail-in in the United Kingdom, without taxpayer support.

December 2013


$29.6 billion Chapter 11 Re- organization; $17.0 billion merger with US Airways Group

Chapter 11 Reorganization and merger with US Airways Group
Exclusive Investment Banker to the Official Committee of Unsecured Creditors of AMR Corporation on its $29.6 billion Chapter 11 Reorganization and $17.0 billion merger with US Airways Group

On December 9, 2013, AMR Corporation (“AMR”), the parent company of American Airlines Inc., successfully completed its Chapter 11 Reorganization. As part of the reorganization, AMR also completed its $17.0 billion merger with US Airways Group (“US Airways”). Operating under the American brand, the combined American – US Airways (“American Airlines Group”) created the world’s largest airline.

AMR filed for Chapter 11 bankruptcy protection on November 29, 2011, with reported assets and liabilities of $24.7 and $29.6 billion, respectively. Shortly thereafter, the Official Committee of Unsecured Creditors (the “UCC”) was formed by a highly diverse group of nine creditor constituencies. The UCC quickly became an influential factor in the reorganization and this group was seen as a pivotal piece to any plan of action. The UCC advocated for a broad review of strategic options, including possible merger opportunities. Moelis & Company was instrumental in designing and creating a process that allowed for engagement between AMR and US Airways despite initial reluctance on the part of AMR. Over the course of the intensive US Airways – AMR diligence process, Moelis & Company evaluated the pro forma business plan, assessed the need for DIP and exit financing, and helped drive parties to a mutually agreeable expectation of synergies and negotiated relative deal economics, while continually working with advisors to resolve complex social and employee issues. On February 14, 2013, AMR and US Airways announced that their respective boards of directors had unanimously approved a definitive merger agreement between the two companies.

The merger delivered far superior returns to creditors and investors as compared to the company’s initial plan for a standalone option, and resulted in par plus accrued recoveries to $29.6 billion in creditor claims. Shareholder value in excess of $10 billion was created, versus the equity market cap of approximately $85 million at the time of the Chapter 11 filing. Moelis & Company represented a driving force in the initial consideration and ultimate consummation of the merger, building consensus amongst various parties to consider and pursue a single, value maximizing plan of action. This transaction demonstrates Moelis & Company’s ability to deliver superior results for our clients; the reorganization and merger achieved full recoveries for unsecured creditors, significant recoveries for shareholders and the unique occurrence of pre-petition convertible notes converting into pre-petition equity.