Crane rental specialist TNT Holdings in the USA has entered into a restructuring support agreement (RSA) to strengthen the company financially.
The RSA agreement is with holders of more than 73 percent in principal amount of the company’s first lien secured loans and 75 percent in principal amount of its second lien secured loans, along with certain other supporting parties, according to a 4 August announcement. TNT will recapitalise and gain liquidity with a US$225 million loan from the company’s first lien lenders. All operations will continue without interruption and TNT’s executive leadership team is expected to remain in place, the company said.
TNT sought to implement the transaction through a debt-for-equity exchange. All of TNT’s first lien and second lien lenders will be solicited for the debt-for-equity exchange, which will only be consummated with the participation of 100 percent of the first lien and second lien lenders.
Simultaneously with the solicitation of the exchange, TNT will also solicit votes on a prepackaged plan of reorganisation through cases under Chapter 11 of the United States Bankruptcy Code, which will start in August 2020 in the event the company is unable to achieve 100 percent support for the exchange. This dual-track approach, with significant lender support, will enable TNT to quickly recapitalise its balance sheet.
TNT said all parties to the RSA had already agreed to support the prepackaged reorganisation plan, the terms of which were substantially the same as the exchange. This plan would provide for operations to continue as usual – with employees, suppliers, vendors, contract counterparties and other trade creditors to be paid in full in the ordinary course.
The company said it secured commitments from certain of its first lien lenders for an additional $45 million debtor-in-possession financing which, in addition to TNT’s normal operating cash flows, will help fund the process and ensure operation as usual during the Chapter 11 proceedings, if the prepackaged reorganisation plan is implemented.
”This restructuring is a positive outcome that will bolster TNT’s financial strength and support our operations for the future,” said Mike Appling, TNT CEO. ”We are grateful to the lead members of our term loan group for working closely with us to prepare the consensual transaction and for the confidence demonstrated by their support. This consensual transaction will position TNT on firm financial footing with a healthier balance sheet. TNT will continue to operate seamlessly with an unwavering focus on safety and customer experience and no impact to our employees, customers and vendors. We are looking forward to working with the new ownership group to continue as North America’s leader in providing safe, reliable lifting services as we grow alongside our customers.”
The company’s announcement said that through the transaction, TNT’s first lien lenders will receive $100 million in exit term loans and 97 percent of the equity in the reorganized TNT (subject to dilution). The company’s second lien lenders will receive the remaining equity in reorganised TNT and warrants that may be exercised for up to 5 percent of the equity in reorganised TNT (subject to dilution by a management incentive plan). All existing secured loans will be retired.
TNT is represented by Simpson Thacher & Bartlett and Young Conaway Stargatt & Taylor, as legal co-counsels, Miller Buckfire & Co. and Stifel, Nicolaus & Co, as financial advisor and investment banker, and FTI Consulting as financial advisor.