Algeco plans 15-day exchange, consent bid for all pay-in-kind loans

By Susanna Moon

Chicago, Feb. 3 – Algeco/Scotsman Holding Sarl said subsidiary Algeco Scotsman PIK SA plans a 15-day exchange offer and consent solicitation for all of its outstanding pay-in-kind loans.

Algeco Scotsman Global Finance plc issued a notice to holders of its $1,095,000,000 8½% senior secured notes due 2018, €275,000,000 9% senior secured notes due 2018 and $745,000,000 10¾% senior unsecured notes due 2019.

Algeco has signed a restructuring support agreement with holders of about 72% principal amount of the PIK loans.

Under the restructuring agreement, the company will seek to acquire 100% of the PIK loans; if less than 100% but more than 75% of the PIK loans are tendered, and more than half of the PIK lenders participate in the offer, the exchange will be implemented by means of an English scheme of arrangement or another alternative restructuring method, the company said.

In exchange, holders will receive $95 million in cash and class B limited partnership interests to be issued by a newly formed partnership that will be a direct subsidiary of AS Holding and will hold almost all of the equity interests in Algeco Scotsman Global Sarl.

Algeco will hold the exchange “as an initial step towards right-sizing the Algeco Group’s capital structure,” according to a company notice.

The offer also will help “relieve the Algeco Group of the substantial debt burden associated with the PIK loans” and to “provide the PIK lenders with an immediate return on their PIK loans in the form of the cash consideration and the ability to participate in the future economic upside of the Algeco Group through the class B partnership interests and certain co-investment rights.”

As part of the exchange offer, an affiliate of TDR Capital LLP has committed to pay the cash exchange costs and to invest another $250 million in AS Global over several months in 2017, the release noted.

To facilitate the restructuring, and as a condition to receiving the exchange value, PIK lenders will be required to

• Tender 100% of the PIK loans they hold for exchange;

• Consent to amendments to the PIK loan agreement;

• Submit instructions to implement the restructuring through an English scheme of arrangement in case the 100% participation threshold is not met in the exchange offer;

• Agree to become a party to a mutual release agreement to release certain claims against each other;

• Agree to waive potential defaults under the PIK loan agreement and to become a party to or be bound to the documents governing the partnership and the class B partnership interests.

More details

The class B partnership interests delivered in the exchange will allow holders to receive a minority portion of distributions by AS Global and its subsidiaries in the form of dividends or of the proceeds of certain exit events, based on a ratchet and subject to dilution by TDR Capital LLP and its affiliates and potentially other stakeholders of the Algeco Group.

PIK lenders who tender their loans and give consents before noon ET on the date that is 10 business days after the launch of the exchange will receive an early tender fee of 2% in cash.

The aggregate cash amount will be reduced by an amount equal to 1.75% of the aggregate principal amount of PIK loans tendered by PIK lenders receiving the early tender fee.

The exchange is contingent on tenders for 100% of the PIK loans.

The offer is being made only to holders who are qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S.

The exchange offer will end at noon ET on the date that is 15 business days after the offer begins.

The exchange and information agent is Lucid Issuer Services Ltd. (+44 0 20 7704 0880, fax +44 0 20 3004 1590 or algecoscotsman@lucid-is.com).

Algeco Scotsman is a Baltimore-based provider of modular space, secure portable storage solutions and remote workforce accommodation management.

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