Global Liability Management Quarterly: Trinseo’s Double Dip, Asset Transfer; Frontier’s Fiber Securitization; Lycra’s Drop-Down Unwind; Ideal Standard’s Exchange and Consent Solicitation 

Jared Muroff, CFA, Giulia Rusconi: Credit Research Bart Capeci, Alisha Turak, JD: Legal Research Reorg is launching a global quarterly report highlighting liability management exercises, or LME, used by stressed creditors to partially refinance capital structures. The report summarizes “aggressive” transactions completed by U.S. and European borrowers that, among other results, raise cash, extend maturities or reduce outstanding principal. Transactions typically result in participating stakeholders improving their ranking relative to nonparticipating creditors. This quarter, Reorg highlights LME transactions from Trinseo, Frontier Communications, Lycra and Ideal Standard. The report concludes with a table summarizing all aggressive U.S. LME transactions covered by Reorg in the third quarter of 2023. To date, aggressive LME involving, for example, uptiering and drop-downs have been common in the U.S. market while very limited in the European market. These types of LME do not go without challenge in the United States. In fact, the paths of these transactions can be highly litigious, and it is through the U.S. courts that the limits of these strategies are being tested. Read Reorg’s RX 101 on liability management exercises and creditor-on-creditor violence HERE. European companies are reluctant to pursue controversial LMEs because of reputation risk. Sponsors might face worse financing[...]