Light Tower exits Chapter 11, notes exchanged for stock, new notes

New York, Oct. 11 – Light Tower Rentals, Inc. exited from its pre-packaged Chapter 11 proceedings on Friday, according to filings with the U.S. Bankruptcy Court for the Southern District of Texas.

Under the terms of the plan, the company’s $330 million of 8 1/8% senior notes due 2019 were exchanged for the equity of the reorganized company and $30 million of new notes.

Clearlake Capital Group, LP in partnership with Avenue Capital led an ad-hoc bondholder committee that negotiated and agreed the plan with Light Tower.

The company, which filed for Chapter 11 on Aug. 30, spent less than 40 days in bankruptcy and emerged with its debt reduced by 90%, according to a news release.

Clearlake is now the majority shareholder.

Light Tower “can now leverage Clearlake’s substantial resources, experience and relationships in the energy and oilfield sectors to propel its growth strategy and take advantage of the current market environment,” said Colin Leonard, a principal with Clearlake, in the news release.

At the time of filing for Chapter 11, Light Tower also had an undrawn $30 million asset-based revolving credit facility.

The company said that the decline in oil prices had reduced drilling activity, reducing demand for its rental products and services, and making servicing of the company’s debt “unsustainable.”

Light Tower had planned an out-of-court exchange but chose to file for Chapter 11 because of growing uncertainty about its short-term liquidity and doubts as to whether it could gather enough consents before the grace period for the Aug. 1 interest payment expired.

Claims were treated as follows:

• Secured claims, $1.8 million of priority claims and revolving facility claims were repaid in full in cash;

• Noteholder claims totaling $345.8 million were paid through issuance of 100% of the equity of the reorganized company and $30 million of new notes for a recovery projected at 49% to 61%;

• General unsecured claims totaling $5.5 million were repaid in full in cash;

• Holders of LTR Investco, Inc. series A convertible preferred stock totaling $97.6 million received equity warrants for recovery estimated at 7% to 10%;

• Holders of LTR Investco preferred interests received management warrants for 1% of the equity; and

• LTR Investco common interests were canceled.

The warrants to be issued to holders of the LTR Investco preferred stock are penny warrants exercisable for 5% of the equity, warrants exercisable for 10% of the equity at a strike price that implies an equity valuation of $300 million, and warrants for a further 5% at an equity valuation of $457 million.

The $30 million of new notes will pay a coupon of 10%, payable in cash or kind for the first three years and in cash only after three years, and mature after five years.

Light Tower can call the notes at 101, rising to 106.75 in after two years, then at 104.5 after three years and par after four years.

At its Chapter 11 filing, Light Tower reported assets and liabilities of $100 million to $500 million.

The plan was confirmed at a hearing held on Sept. 30. All the voting classes backed the plan unanimously.

The case number is 16-34284.

Light Tower is an Odessa, Texas-based specialty equipment rental and services company focused on the oil and gas sector.

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