Article/Intelligence
ATW Lenders Consult With Davis Polk for Credit Agreement Review Amid Leverage, Tariff Concerns
Some large lenders to American Trailer World have consulted with lawyers at Davis Polk for a credit agreement review, as the investors are concerned about elevated leverage and potential tariff impacts, according to sources.
The manufacturer of professional-grade and consumer-grade utility trailers and spare parts was downgraded by Moody’s Ratings in March, which cited the company’s high leverage and weak interest coverage. The credit ratings agency noted ATW’s significant earnings decline due to demand softness in the trailer markets. Moody’s expects ATW to generate negative free cash flow this year, despite ample cash and availability under the $250 million ABL expiring 2027.
The first lien term loan due March 2028 has weakened to about 80.5/83.5 from about 89 at the midpoint at the beginning of the year, according to Solve. CLO lenders can be found HERE.
Bain Capital acquired manufacturer and distributor of utility and cargo trailers American Trailer Works in 2016 and merged it with another portfolio company Big Tex to form the new company ATW. Kirkland & Ellis advised the sponsor on the transaction. ATW subsequently pursued tuck-in acquisitions and bought BWise Trailers in 2019 and Dakota Bodies in 2020.
ATW sold trailer parts distributor TexTrail to DexKo Global in 2022. It distributed the proceeds from the sale out of the restricted group to pay its sponsor a dividend, Octus, formerly Reorg, reported. Before this, the company paid two dividends to shareholders.
American Trailer World, Bain Capital and Davis Polk did not respond to requests for comment.
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