LONDON/NEW YORK: A slew of companies are expected to launch restructuring processes in coming months, as the world emerges from the COVID-19 crisis and government support measures are eased.
As companies don’t typically model in months of little to no revenue, investors are forecasting an increase in defaults, while balance sheets are unlikely to improve until the end of 2021.
“Removing government aid is likely to accelerate the default process,” said Ray Costa, managing director and portfolio manager at Benefit Street Partners.
“There will be even more corporate challenges – companies may have too much debt or not enough liquidity to deal with the large revenue declines.”
Here’s a list of well-known companies looking to restructure or find new owners:
EUROPE
– Virgin Atlantic agreed a rescue deal with shareholders and creditors worth $1.6 billion. A High Court vote is scheduled for Sept 3. [uL8N2FQ3P1]
– Britain’s Premier Oil announced a $530 million debt restructuring, which needs the support of both its board and its shareholders.
– Dutch retailer Hema is set to be taken over by its bondholders through a debt-for-equity swap.
– Spanish paper producer Lecta Group, formerly owned by private equity group CVC, was taken over by bondholders at the end of 2019 and is still working on a recapitalisation.
– British shopping centre operator Intu Properties is in talks with shareholders and potential new investors to raise funds to shore up its balance sheet.
– Seadrill, controlled by Norwegian-born shipping tycoon John Fredriksen, has written down the value of its oil drilling rigs by $1.2 billion and hired bankers and lawyers to evaluate a financial restructuring. Its debt stands at $7.5 billion.
– Struggling restaurant chains risk disappearing from Britain’s high street.
U.S. COMPANIES
– Chesapeake Energy Corp filed for Chapter 11, becoming the largest U.S. oil and gas producer to seek bankruptcy protection in recent years. It entered into a restructuring support agreement, which has the backing of lenders to its main revolving credit facility.
– U.S. shale producer Whiting Petroleum Corp filed for Chapter 11 bankruptcy and agreed with creditors to cut its debt by about $2.2 billion through an exchange of some of its notes for 97% of new equity.
– U.S. energy producer Denbury Resources Inc hired investment bank Evercore Inc to advise on managing its $2.3 billion debt pile.
– J.Crew Group Inc could emerge from Chapter 11 in early September, after its restructuring plan was approved by a bankruptcy court. The plan will equitize over $1.6 billion of secured debt and provide for $400 million in asset-based loans as well as $400 million of fresh financial aid.
– Hertz Global Holdings Inc enlisted restructuring experts at law firm White & Case LLP and investment bank Moelis & Co to help it address a cash crunch that has made its $17 billion debt pile potentially unsustainable.
(Compiled by Clara Denina, Abhinav Ramnarayan and Chibuike Oguh; Editing by Kirsten Donovan)
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