Marketing firm Catalina reached an agreement with over 90% of its first lien lenders and over 75% of its second lien lenders on the terms of a restructuring support agreement to effectuate a balance sheet restructuring.
The agreement will allow Catalina to significantly enhance its financial flexibility, reducing its debt by approximately $1.6 billion and position it for long-term success.
To implement the pre-packaged restructuring transaction, the company filed voluntary petitions to restructure under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Catalina’s operations outside of the U.S. are not part of the Chapter 11 filing.
Catalina received a commitment for $125 million in new money debtor-in-possession financing from an ad hoc group of first lien lenders, which, subject to court approval, will be available to support the company’s operations during the restructuring process. Said lenders also agreed to provide an additional $40 million in exit financing to support the company’s operations upon consummation of the restructuring.
According to court filings archived on Prime Clerk, J.P. Morgan Chase Bank is serving as administrative agent on the facility.
Catalina expects all operations – both in the U.S. and overseas – to continue as usual throughout the restructuring process. With the support of the majority of its first lien and second lien lenders, the company expects to complete the pre-negotiated, court-supervised process expeditiously.
“Today’s announcement represents a significant step forward in transforming our business because it enables us to accelerate investments in technology, advanced analytics, data science and talent to strengthen our core capabilities and enable new data-driven solutions for our customers,” said Jerry Sokol, president and CEO of Catalina. “After carefully evaluating our options, we determined that a court-supervised restructuring is the best way to strengthen our financial position for the long term. Through this process, we expect to reduce the company’s debt by more than 75%, giving Catalina a stronger financial foundation.”
Catalina has filed a number of customary motions with the court seeking authorization to support its operations during the restructuring process, including authority to continue payment of employee wages and benefits, along with payment of vendors and suppliers in full.
Weil, Gotshal & Manges is serving as legal counsel, Centerview Partners as financial advisor and FTI Consulting as restructuring advisor to Catalina.
Catalina provides consumer-driven marketing solutions to brand manufacturers, retailers and health providers worldwide. The company offers in-store, mobile and digital solutions that enable consumer packaged goods retailers and brands to build their online, social media and loyalty programs.
