Opportunities II tender for several Taberna notes misses minimum mark

By Wendy Van Sickle

Columbus, Ohio, April 4 – Opportunities II Ltd. said the minimum tender condition and other conditions were not met in its tender offer for some notes issued by Taberna Preferred Funding IV, Ltd. and Taberna Preferred Funding IV, Inc.

As a result, no notes will be accepted or purchased under the offer, which expired on 5 p.m. ET on April 4, according to a press release.

The offer was launched on March 1 and was amended on March 22 to, among other things, push back the expiration from the original 5 p.m. ET on March 31.

As of the amendment date, investors had tendered none of the notes under the offer. By the final expiration only $2.5 million of notes, all class D-2 deferrable mezzanine secured fixed-rate notes due May 5, 2036, had been tendered.

At the time of the amendment, Opportunities II said that it had been in touch with many noteholders or those that have exposure to the notes and have concluded that it may be unlikely to reach the minimum tender condition and that “the inefficiencies and defects present in the structure, governance and management of Taberna are worse than the offeror previously believed.”

On Tuesday, the company said it plans “to engage in constructive dialogue” with noteholders, the trustee, the board of directors and the collateral manager, and to explore alternatives, which may include:

The formation of a group of noteholders that can develop consensus-based solutions; consideration of opportunistic amendments to items of collateral designed to maximize value;

Investigating all causes of action that Taberna may have against third parties;

Amending the indenture to eliminate certain defects and inefficiencies; seeking better disclosures from Taberna and the trustee, including with respect to the collateral, the questionable actions of the prior collateral manager, the actions of the collateral manager, the amount and nature of accrued fees and expenses and other relevant information;

Modifying or restructuring the relationship between Taberna and the noteholders and between parties involved in the governance, operation and management of Taberna;

Pursuing, or directing the trustee to pursue, the foreclosure of or monetization of some or all of the collateral;

Seeking the appointment of a receiver or similar fiduciary;

A comprehensive reorganization of the issuer and co-issuer through a bankruptcy filing or other insolvency process; or

Pursuing other rights and remedies as may be available to Opportunities II and other noteholders under applicable law.

At that time, the company also increased the purchase prices.

The amended purchase price per $1,000 original principal amount were

• Class A-1 first priority delayed-draw senior secured floating-rate notes due May 5, 2036 at $371.19, up from $358.98, per original par amount and $760.00, up from $735.00, for outstanding par amount;

• Class A-2 second priority senior secured floating-rate notes due May 5, 2036 at $400.00, up from $350.00, per original par amount and outstanding par amount;

• Class A-3 third priority senior secured floating-rate notes due May 5, 2036 at $40.00, up from $30.00, per original par amount and outstanding par amount;

• Class B-1 fourth priority secured floating-rate notes due May 5, 2036 at $15.00, up from $10.00, per original par amount and outstanding par amount;

• Class B-2 fourth priority secured fixed-rate notes due May 5, 2036 at $15.00, up from $10.00, per original par amount and outstanding par amount;

• Class C-1 deferrable fifth priority secured floating-rate notes due May 5, 2036 at $18.23, up from $12.16, per original par amount and $15.00, up from $10.00, for outstanding par amount;

• Class C-2 deferrable fifth priority secured fixed/floating rate notes due May 5, 2036 at $18.57, up from $12.38, per original par amount and $15.00, up from $10.00, for outstanding par amount;

• Class C-3 deferrable fifth priority secured fixed/floating rate notes due May 5, 2036 at $19.99, up from $13.33, per original par amount and $15.00, up from $10.00, for outstanding par amount;

• Class D-1 deferrable mezzanine secured floating rate notes due May 5, 2036 at $20.63, up from $13.75, per original par amount and $15.00, up from $10.00, for outstanding par amount;

• Class D-2 deferrable mezzanine secured fixed rate notes due May 5, 2036 at $30.40, up from $20.27, per original par amount and $15.00, up from $10.00, for outstanding par amount; and

• Class E deferrable subordinate secured floating rate notes due May 5, 2036 at $24.04, up from $16.03, per original par amount and $15.00, up from $10.00, for outstanding par amount.

The company, along with HH HoldCo Co-Investment Fund, LP and Real Estate Opps Ltd., currently owns about $104,202,000 outstanding principal amount of the class A-1 notes and $16.9 million outstanding principal amount of the class A-2 notes.

The purchase price does not include any interest.

The minimum tender condition stated that the offer may be terminated if the company lacks tenders of more than $100 million original principal amount of the class A-1 notes ($48.8 million outstanding principal amount), $16.4 million original principal amount of the class A-2 notes ($16.4 million outstanding principal amount), $13.3 million original principal amount of the class A-3 notes ($13.3 million outstanding principal amount), $54.3 million original principal amount of the class B-1 notes ($54.3 million outstanding principal amount), $4.7 million original principal amount of the class B-2 notes ($4.7 million outstanding principal amount), $30 million original principal amount of the class C-1 notes ($36.5 million outstanding principal amount), $13.3 million original principal amount of the class C-2 notes ($16.5 million outstanding principal amount), $23.3 million original principal amount of the class C-3 notes ($31.1 million outstanding principal amount), $14 million original principal amount of the class D-1 notes ($19.3 million outstanding principal amount), $8.7 million original principal amount of the class D-2 notes ($17.6 million outstanding principal amount) and $16.3 million principal amount of the class E notes ($26 million outstanding principal amount).

There were no withdrawal rights under the terms of the offer.

Opportunities II said it encourages all noteholders to contact it to discuss the best path forward. Calls or emails may be directed to HoldCo Asset Management, LP (vik@holdcoadvisors.com or 212 785-5567).

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