Reno De Medici RCF Lenders Line Up Linklaters as Legal Advisor, Consider Hiring FA; Sponsor Apollo and Bondholders Exchange Proposals, New-Money Provision Sticking Point

Reno De Medici’s revolving credit facility lenders have lined up Linklaters as legal advisor, sources told Octus. The lenders are also considering hiring a financial advisor. The RCF’s legal counsel appointment comes amid ongoing talks between the Italian recycled cartonboard manufacturer, its sponsor Apollo and bondholders to overhaul its capital structure.

Reno’s €141.6 million super senior RCF due October 2028 was fully drawn as of Sept. 30, 2025. The group’s subsidiary, RDM Barcelona Cartonboard also secured a €50 million bridge loan for the sale of its Barcelona mill back in November. The bridge loan is expected to mature nine months after its utilization but may be extended to 12 months following utilization, contingent upon meeting certain conditions.

Despite the drawing under the RCF and the new bridge loan, the business’ persistent cash burn makes a liquidity shortfall likely by the third quarter of this year under Octus’ base case. This means the provision of new money is a key point in the ongoing negotiations between sponsor Apollo and noteholders, which include Arini and M&G, sources said.

To achieve a sustainable debt stack (net leverage at 4.5x), Octus estimated that a reduction to €420 million – representing a 47% decrease from the current gross debt (pre-IFRS) – would be needed. This implies a significant haircut for the group’s €600 million sustainability-linked floating-rate notes due 2029. Equity contribution or additional structurally senior debt are other factors for investors to consider when calculating recoveries.

The parties have been exchanging draft proposals but failed to find common ground so far. Under Apollo’s initial plan, the sponsor would have retained control of the business without contributing new money, which received pushback from investors, sources said. A subsequent lender counterproposal featuring around €100 million in new financing was in turn not well received by the private equity owner, which has not submitted a further proposal yet, the sources added. Some sources suggested that creditors could end up taking over the business alongside funding the new money needs.

Reno’s 2029 notes are quoted at around 30 yielding about 58%, having lost over 30 points since early December, according to Solve.

In October, the bondholder group mandated Evercore and Paul Hastings as financial and legal advisors, respectively, and signed a cooperation agreement representing over 80% of the notes at the time. The legal advisory mandate has recently moved to Sullivan & Cromwell following the departure of the partner in charge of the deal from Paul Hastings, sources said.

The company is advised by Paul Weiss Rifkind Wharton & Garrison and PJT Partners.

Sources earlier told Octus that Reno De Medici had held talks with two investment funds to explore alternative solutions to improve its capital structure and potentially raise a new super senior facility to bridge its liquidity gap should proceeds from its Spanish closed plants come in later than expected.

Much of the recent issues revolve around overcapacity in Reno’s markets. The closure of the Barcelona mill announced in January was a means to help rectify this issue in the Spanish market. However, U.S. tariffs compounded the situation in Europe, with Asian producers in particular redirecting their cartonboard exports toward Europe, intensifying price pressure.

As such, Reno’s current debt level is unsustainable, the business lacks a sufficient equity buffer, if any, and interest coverage dropping below 2x is a significant concern. Management’s adjustments to EBITDA have proven to be ambitious with net leverage based on adjusted pro forma run-rate EBITDA of 7.8x versus net leverage based on reported EBITDA of over 13x.