Lecta gets needed consents from noteholders, lenders for refinancing

By Marisa Wong

Los Angeles, Oct. 30 – Lecta Ltd. announced in a Monday press release that it has received wide support from financial stakeholders for its proposed refinancing transaction.

Lecta and its subsidiaries had announced on Oct. 13 that they executed a lock-up agreement with holders of the group’s 2025 first and second senior secured notes and holders of debt under its super senior facilities agreement; the parties agreed to support the implementation of a comprehensive refinancing package initially announced on Oct. 12.

On Monday the company disclosed that it has now received consents from 88% by value of aggregate outstanding principal under the first senior secured notes; 99% by value of aggregate outstanding principal under the second senior secured notes; and 100% by value of aggregate outstanding principal under the super senior facilities agreement for the changes necessary to implement the refinancing.

As a result of the level of consents already achieved, the company is able to seek to effect the refinancing via an English scheme of arrangement relating to the existing senior secured notes once some other conditions to launch the scheme have been met.

However, notwithstanding the overwhelming support already expressed by noteholders and lenders, the company is continuing to seek unanimous consent to implement the refinancing. The company said it encourages any noteholder who has not yet acceded to the lock-up agreement to accede as soon as possible and by no later than noon ET on Nov. 17.

Refinancing

The refinancing will result in the following:

• Extension of the maturities of the €115 million debt held under the super senior facilities agreement to Q1 2028;

• Exchange of the existing senior secured notes into a single tranche of €256 million senior secured notes maturing in Q3 2028, with the company having the option to pay interest in-kind subject to meeting certain conditions;

• Issuance of a €90 million facility in the form of tradeable notes maturing Q1 2028, ranking senior to the new senior secured notes and junior to the super senior facilities agreement. The net proceeds of this new money facility will be used to primarily fund capex. Due to creditor support, the size of the new money facility has been increased to €90 million from €78 million since the proposed refinancing announcement of Oct. 12;

• Issuance of warrants, entitling the holders to subscribe for shares in the company equal to, in aggregate, 5% of the fully diluted share capital of the company, to participants in the new money facility pro rata to their commitments; and

• Payment of a 0.5% consent fee to noteholders who consent by noon ET on Nov. 17.

The parties to the lock-up agreement have agreed to do the following:

• Take all actions which are reasonably requested and necessary in order to support, facilitate, implement and consummate all or any part of the refinancing;

• Not take any action which would or would reasonably be expected to delay, impede or frustrate the refinancing; and

• In the case of the noteholders, make some amendments to the existing senior secured note indentures as outlined in the consent solicitation launched Oct. 13. Some amendments to the indentures governing the existing notes will only become operative upon the trustee having received an officer’s certificate certifying that the election notice (as defined in the lock-up agreement) has been made on or prior to the expiration of the lock-up agreement. The election notice was made on Oct. 26, thereby satisfying the additional scheme condition. Accordingly, such conditional amendments to the indentures governing the existing notes have become operative.

As previously reported, Lecta sought to amend some provisions of the indentures governing indirect subsidiary Paper Industries Intermediate Financing’s outstanding €200 million floating-rate senior secured notes due 2025 (ISIN: XS2114335669, XS2114336550) and its outstanding €55,555,555 floating-rate senior secured notes due 2025 (ISIN: XS2194623109, XS2194623281). The consent solicitation expired on Oct. 27.

Next steps

Lecta said it will continue working with its financial stakeholders to implement the refinancing and expects to complete the refinancing in December.

All noteholders and super senior facilities agreement lenders are eligible to participate in the lock-up agreement.

Questions about the refinancing and details of how to accede to the lock-up agreement should be directed to Kroll Issuer Services Ltd. at lectaltd@is.kroll.com.

All documentation relating to the lock-up agreement, together with any updates, are available on the dedicated website: https://deals.is.kroll.com/lectaltd.

The company said it will make further announcements and updates in relation to the refinancing.

Lecta is a Barcelona, Spain-based manufacturer of specialty paper, coated paper and other high value-added paper products.

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