Monitronics inks restructuring agreement, plans to file Chapter 11

By Sarah Lizee

Olympia, Wash., May 9 – Monitronics International, Inc. has entered into a restructuring support agreement with lenders holding about 78% of its outstanding funded debt and holders of a majority of its equity, according to a Monday evening press release.

The restructuring aims to reduce the company’s debt by roughly $500 million and provide increased financial flexibility to the company as it continues to deliver profitable growth, Monitronics said.

The current lenders under the company’s 2019 takeback term loan facility, including funds managed by Monarch Alternative Capital LP and Invesco Senior Secured Management, Inc. as the largest lenders, will become the new principal equity owners of Monitronics, providing the company with additional support to execute on its business plan.

The company intends to implement the pre-negotiated restructuring contemplated by the RSA through a partially pre-packaged plan of reorganization effectuated through voluntary Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of Texas on or around May 15.

The company said it has already obtained the requisite support from its stakeholders to confirm the plan of reorganization, and it expects to achieve bankruptcy court approval of the plan and emerge from Chapter 11 within about 46 days of filing.

“We are pleased to have reached an agreement with our lenders and shareholders to create a capital structure that is right sized for our business model,” chief executive officer William Niles said in the release.

“Our new balance sheet will provide sufficient liquidity to grow our subscriber base at attractive returns and generate levered free cash flow.”

Monitronics has received commitments for about $387 million in new money financing during the Chapter 11 cases from existing lenders, including $90 million in new money to fund the process and provide cash to the balance sheet as well as $297 million to refinance the company’s existing super-priority revolving credit facility and term loan.

The financing will fund Monitronics’ operations during the Chapter 11 proceedings, including the payment of employee wages and benefits, suppliers, partners and vendors in the ordinary course of business.

The company will emerge with about $600 million in exit financing.

To ensure its ability to continue operating in the ordinary course during the Chapter 11 cases, Monitronics intends to file customary first-day motions with the court seeking a variety of relief, including authority to maintain operations in accordance with pre-petition practices and to pay pre-petition claims in the ordinary course of business.

PJT Partners LP, Alvarez & Marsal and Latham & Watkins LLP are acting as lead advisers to the company. Evercore Group, LLC and Davis Polk & Wardwell LLP are acting as lead advisers for the informal group of lenders.

The home security and alarm monitoring services provider is based in Dallas.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.