Can someone help me better understand this restructuring deal?

I'm trying to better understand dynamics/structures in this restructuring deal I'm analyzing.

To over-simplify info:

  • $550 mm debt being asked to be paid by lenders
  • resolution has been determined with the following components:
  1. $150 mm canceled/extinguished
  2. $75 mm portion of total debt ($550 mm) converted into sr. term loan at a higher interest rate
  3. $125 mm portion converted into sub debt at a higher interest rate with PIK feature
  4. $75 mm preferred stock issued with liquidation preference

Obviously, if you do the math, both sides don't add up / off by $125 mm.

How could this $125 mm hole be explained? The only explanation i can think of is that lenders took a haircut in an amount equivalent to $125 mm.

Other thoughts/insights I may have missed?

Would appreciate some help from any restructuring experts in the field.

Thanks in advance!

 

To Golfer 23,

$550 mm (sitting on the company owed at the time a suit was filed against the company) was the pre-petition level (no DIP involved).

My questions is that if $125 mm could be looked at in straight reorg equity, wouldn't it also be shown in the settlement document as part of the list? FYI. The list of settlements I laid out in the original thread was the only info in the settlement document. That's why I'm a bit stuck, trying to tie out numbers.....

I'm not a restructuring expert so thought I'd be able to get help here.

Any further thoughts?

 

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