| | | QVC’s Top Lenders Join Forces to Fend Off Potential Unfavorable Debt Deals
In some new news after my post an hour ago the WSJ dropped that QVC's bank syndicate is adding their own firms by hiring Simpson Thacher & Bartlett and financial advisor Lazard. 75% of the syndicate is on board with this which means something is brewing and I don't think and LME is it.
Keep in mind what I wrote before typically the debtor would reimburse for the legal fees and right now QVC itself has two firms, senior holders two firms, LITNA holders two firms, and now the facility with two firms. This means QVC is now burning cash potenitally on EIGHT firms + $100K a month on Roger & Carol.....sorry I just don't see debt restructure here this reads like a dog fight is breaking out. You don't need this firepower if everything is going fine - QVC didn't need close to this to exchange their 2027/2028 debt into 2029 and I get this is a bigger scale but that's not what this reads as...meaning no LME. Also if this was going friendly and legal team(s) needed why did they not add in May when the others did?
At minimum my thoughts are this is the lenders getting themselves setup for DIP financing so when the company files their prepetition loans are covered to super priority in postpetition and they're now above all the senior debt.
As maximum perhaps the company threatened to file everything together with the thought of what I wrote before that the debts are consolidated into one company making everything unsecured senior debt.
This statement stood out:
<< But QVC’s revolving lenders are on equal footing with creditors holding roughly $2 billion in secured bonds, diluting the value of the collateral and making repayment less certain.>>
Something is brewing and they don't have time on their side.
Cautious investing,
Sean
Article if behind the paywall:
"A group of QVC Groups's revolving lenders has entered a pact in a rare show of unity as the struggling cable TV and online retailer weighs options to shore up its balance sheet, according to people with knowledge of the matter. The lenders, holders of the retailer’s $3.25 billion revolving credit facility, have been working with law firm Simpson Thacher & Bartlett and financial adviser [Lazard](https://www.wsj.com/market-data/quotes/LAZ) in recent weeks to form a cooperation group, the people said. Lenders holding more than 75% of QVC’s revolving loan have signed onto the agreement to prepare for possible liability management transactions or other restructuring moves, said the people.
A spokesperson for QVC didn’t immediately respond to a request seeking comment.
The owner of TV channels QVC and HSN, formerly known as Home Shopping Network, has taken steps to address its more than $5 billion in debt. The company hired Kirkland & Ellis and Evercore to advise on managing its debt. Creditors at a QVC unit have engaged PJT Partners and Davis Polk & Wardwell, with bondholders advised by Akin Gump Strauss Hauer & Feld and Centerview Partners.
The pact commits the lenders to move in lockstep as they negotiate with the company on restructuring options, the sources said. The formation of the cooperation group was a defensive move, the sources said.Revolving lenders rarely sign cooperation agreements before negotiating with a company. These lenders typically are the first to get paid back in a restructuring and often are made whole, even in bankruptcy.
But QVC’s revolving lenders are on equal footing with creditors holding roughly $2 billion in secured bonds, diluting the value of the collateral and making repayment less certain.
Lenders also have concerns about QVC’s liquidity, as the company has drawn down almost all of the revolving facility, the people said. As of Aug. 1, it had only $200 million available, according to Securities and Exchange Commission filings.
QVC’s revolving loans were most recently quoted at 60 cents to 64 cents on the dollar, according to a trader.
The company’s shares closed at $4.08 on Wednesday, and have lost nearly 90% of their value since October.
Greg Maffei, QVC’s executive chairman, said on the company’s Aug. 7 earnings call that it was “another challenging quarter for QVC group, and we aren’t where we want to be.” |
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