Atalian begins exchange offer, consent bid for three series of notes

By Marisa Wong

Los Angeles, Feb. 23 – La Financiere Atalian SAS has begun an exchange offer for three series of its outstanding notes, according to a notice on Friday.

Atalian is offering to exchange all of the existing notes for new senior secured notes in the amount of €836,390,831; a mandatory cash paydown in the total amount of €300 million; and an exchange offer principal repayment, payable to holders who tender their notes by the early consent deadline, in the total amount of €100 million.

The exchange offer covers the following existing notes:

• 4% senior notes due May 15, 2024 (ISIN: XS1605695813, XS1605600532);

• 5 1/8% euro-denominated senior notes due May 15, 2025 (ISIN: XS1820759576, XS1820759147); and

• 6 5/8% sterling-denominated senior notes due May 15, 2025 (ISIN: XS1820760319, XS1820760079).

Exchange consideration

The exchange consideration for each €1,000 principal amount of notes consists of the following:

• For the 2024 notes, €616.00 principal amount of new notes;

• For the euro 2025 notes, €738.30 principal amount of new notes; and

• For the sterling 2025 notes, €738.30 principal amount of new notes (or £860.78, based on a conversion rate of £0.86078 to €1).

Each non-tendering holder will be entitled to receive the same principal amount of new notes for each €1,000 of existing notes held. However, the new notes of each non-tendering holder will not be distributed on the settlement date of the exchange offer but will instead be held in trust for the benefit of those noteholders for a period of no more than 12 months following the settlement date.

On the settlement date, the issuer will apply the mandatory cash paydown to partially repay the existing notes, where €180 million will be used to partially repay the outstanding amount of the 2024 notes on a pro rata basis, and €120 million will be used to partially repay the outstanding amount of the 2025 notes on a pro rata basis.

Any holder who does not tender notes in the offer will still receive the mandatory cash paydown.

Only participating holders that submit an exchange instruction prior to the early consent deadline will receive the exchange offer principal repayment on the settlement date.

Of the total amount of €100 million, €60 million will be payable to participating holders of 2024 notes on a pro rata basis, and €40 million will be payable to participating holders of 2025 notes on a pro rata basis.

Holders tendering their notes after the early deadline will be issued new notes and will receive the mandatory cash paydown but will not be eligible to receive the exchange offer principal repayment.

Any holder who does not tender notes in the offer will not be eligible to receive the exchange offer principal repayment.

In addition, the issuer will pay accrued interest.

Consent solicitation

In connection with the exchange offer, the issuer is also soliciting consents to amend the indentures governing the existing notes.

The proposals will consist of a set of proposals requiring the receipt of consents from holders of a majority of each series (“proposed 50% amendments”) and a set of proposals requiring the receipt of consents from holders of at least 90% of each series (“proposed 90% amendments”).

Should the issuer obtain the required 90% consents on or prior to the early consent deadline, the issuer will not effect the proposed 50% amendments.

The proposed amendments constitute a single proposal, and a participating holder must consent to the proposed amendments related to the relevant existing notes it holds as an entirety and may not consent selectively with respect to certain proposed amendments.

Should the proposed 50% amendments be adopted, they will (i) waive any defaults or events of defaults under the existing indentures arising in connection with the commencement and/or occurrence of any conciliation proceedings or safeguard proceedings, including any Chapter 15 filing made in connection with the safeguard proceedings, in order to consummate the transactions; and (ii) waive the requirements under the asset sales covenant to apply the proceeds from the Madison 2 transaction as required under the existing indentures, in each case until the earlier of July 31, 2024 or the closing date of the safeguard proceedings.

The entry into force of the proposed 50% amendments is not conditioned on any of the proposed 90% amendments being effected.

Should the exchange offer be successfully completed and the proposed 90% amendments adopted, they will (i) remove all or substantially all of the restrictive covenants, some events of default and other obligations under the existing indentures and, among other amendments, the existing notes will no longer have the benefit of any guarantees; (ii) expressly permit any payments under, and as set out, in the exchange offer memorandum; (iii) amend the existing indentures to permit the issuer to direct the transfer of the existing notes that remain outstanding, in whole or in part, without consideration; and (iv) reduce the outstanding principal amount of, and interest rate on, the existing notes to zero, and such existing notes will be canceled, and any accrued interest will also be canceled.

The issuer also intends to apply to delist the existing notes from the GEM Stock Exchange as soon as practicable following the settlement of the exchange offer, and the issuer does not intend to list the existing notes on another stock exchange.

The entry into force of the proposed 90% amendments is not conditional upon any of the proposed 50% amendments being effected.

Holder support

The issuer had negotiated the terms of the exchange offer and consent solicitation with some noteholders who executed its lock-up agreement announced last month and, collectively with additional holders that have acceded to the lock-up agreement, hold about 98.7%, 97.4% and 99.2% of the aggregate principal amount of the outstanding 2024 notes, euro 2025 notes and sterling 2025 notes, representing in aggregate 98.20% of the outstanding principal amount of the 2025 notes for the required 50% consents and required 90% consents calculation, respectively, eligible to vote on the exchange offer and consent solicitation.

The lock-up agreement participating holders have agreed to tender all of their respective existing notes prior to the early consent deadline pursuant to the terms of the lock-up agreement. As a result, the issuer has already received support of noteholders holding over 98.48% of the outstanding aggregate principal amount of the existing notes and reached the needed consent level for the implementation of the exchange offer and consent solicitation.

However, the obligation of each of the lock-up agreement participating holders to tender their respective existing notes is subject to one or more conditions. The failure to meet such conditions could entitle the lock-up agreement participating holders to refuse to tender their notes or withdraw any tendered notes.

The issuer said it wishes to remind noteholders that have signed or acceded to the lock-up agreement that they must tender their notes and consent to the proposed amendments in the exchange offer and consent solicitation in order to comply with their obligations under the lock-up agreement, to receive the lock-up fee and the exchange offer principal repayment, if applicable.

The company had offered a lock-up fee of 50 bps, as previously reported.

Timing and conditions

The early consent deadline is noon ET on March 8, which is also the withdrawal deadline.

The expiration time is noon ET on March 22.

Settlement is expected to be on March 28.

Settlement is conditioned on, among other things, holders tendering at least 90% in aggregate amount of each series of notes.

The issuer said it is proposing the exchange offer to address the upcoming maturity profile of its existing debt. The group believes the extension of the upcoming maturities addresses refinancing risks and will allow the group to concentrate on delivering recovery and value growth for all stakeholders.

Holders who are qualified institutional buyers under Rule 144A and non-U.S. person sunder Regulation S are eligible to participate in the exchange offer and consent solicitation.

The exchange and tabulation agent is Kroll Issuer Services Ltd. (atalian@is.kroll.com; +44 20 7704 0880; https://deals.is.kroll.com/atalian; attn.: Thomas Choquet and Alessandro Zorza).

Questions on financial matters related to the exchange offer and consent solicitation may be directed to Rothschild & Co (Arnaud Joubert, arnaud.joubert@rothschildandco.com; Vincent Danjoux, vincent.danjoux@rothschildandco.com) and Messier & Associes Jean-François Cizain (jfc@messier-associes.com; +44 75 8424 6178).

Other requests for information may be directed to the issuer (Alexandra Fichelson; investorcontact.fr.ags@atalianworld.com; +33 6 18 26 13 12).

Atalian is a Paris-based provider of facility management and outsourced building services.

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