Daily News: November 10, 2017

HPS Provides $65MM Revolver to Support Wentworth Restructuring

J.G. Wentworth reached an agreement with its lenders holding more than 87% of the aggregate principal amount outstanding under the company’s $449.5 million senior secured credit facility to significantly deleverage the company. According to a related 8-K filing, Jefferies serves as administrative agent and collateral agent for the credit facility.

The agreement, under which current lenders have agreed to exchange their claims under the credit facility for cash consideration and at least 95.5% of the equity in the newly-restructured company, will enable the company to enhance its financial flexibility, fortify its balance sheet and accelerate its long-term growth initiatives.

To fund the fees and expenses of the restructuring, the partnership cash consideration and a portion of the term lender cash consideration, if necessary, as well as for general corporate purposes and working capital, the company will borrow funds from HPS Investment Partners, and/or its affiliates, affiliated or managed funds, separately managed accounts under a new revolving credit facility in an aggregate amount of at least $65 million, but no more than $70 million.

Under the terms of the agreement, the company will:

  • Fully extinguish the loans under the credit facility totaling $449.5 million and obtain a new secured revolving credit facility between $65 million and $70 million, to be supplied by one of the company’s lenders
  • Significantly reduce the company’s annual debt service from $32 million to less than $5 million
  • Deleverage the company’s balance sheet, reducing its net leverage from approximately 12.4x to less than 1.0x
  • Reconstitute the board of Directors to reflect the new ownership of the company

“We are proud to have a strong brand in the market that has proven it can serve as an umbrella to expand our business to additional products. The Company is having promising operational and financial performance so the deleveraging comes at an opportune time,” said Stewart Stockdale, CEO. “We do, however, recognize the importance of improving our long-term financial flexibility. after careful consideration and discussion with our board of directors and lenders, we firmly believe this agreement is the best way to recapitalize the company and position ourselves to better serve the evolving needs of our customers.”

Evercore Group and Simpson Thacher & Bartlett assisted J.G. Wentworth in negotiating the restucturing as financial advisor and legal counsel respectively. FTI Consulting served as financial advisor and Davis Polk & Wardwell as legal counsel for Jefferies Finance.

The J.G. Wentworth Company is focused on providing direct-to-consumer access to financing solutions through a variety of avenues, including: mortgage lending and refinancing, structured settlement, annuity and lottery payment purchasing, prepaid cards and access to providers of personal loans.