Article/Intelligence
Selecta First Liens Form Separate Ad Hoc Group Under Weil; Crossholder Group Retains Houlihan Lokey as Financial Advisor
A separate ad hoc group of creditors of Selecta holding a substantial portion of the Swiss vending machine operator’s first lien notes has engaged Weil Gotshal & Manges in connection with upcoming debt talks, sources told Octus, formerly Reorg.
Holders of the senior secured 8% first lien notes due April are encouraged to contact Weil by email at [email protected].
The initial crossholder group of the first, second lien notes and preferred shareholders working with Milbank has retained Houlihan Lokey as financial advisor following pitches late last week, the sources added.
Selecta is working with PJT Partners and Paul Hastings to advise on about €1.1 billion debt due in 2026. Goldman Sachs is involved too for a potential sale of the company.
The business, which launched a bondholder identification process in August, is under pressure to tackle the 2026 maturity of its reinstated first and second lien secured notes, amid consistent cash burn and an unsustainable cash interest burden. It paid €42.6 million interest in the six months ended June 30 compared with €22.6 million paid a year prior, as reported.
Yesterday, Nov. 6, Selecta reported weak third-quarter earnings, reflecting a decline in its top line and an increase in costs. Net sales for the quarter declined by 5.8% to €275.4 million, reflecting the impact of its strategic intentional churn, or SIC, policy and a 2.1% decline in like-for-like volume. The company’s SIC policy began in 2023, and is defined as the termination of contracts that don’t meet the group’s financial thresholds, as well as client site closures.
The drop in adjusted EBITDA was even more pronounced, with the reported €43.3 million for the quarter coming in 30.8% lower than the same period of the prior year. Management stated that this was due to the group’s lower scale in top line combined with a 6% year-over-year increase in personal expenses off the back of European wage inflation. Additionally, other overheads rose by 4.6%. This resulted in a reported adjusted EBITDA margin for the quarter of 15.7%, compared with 21.4% a year earlier.
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09/30/2024
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EBITDA Multiple
|
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|---|---|---|---|---|---|---|---|---|
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(EUR in Millions)
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Amount
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Price
|
Mkt. Val.
|
Maturity
|
Rate
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Yield
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Book
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Market
|
|
€150M Revolving Credit Facility due 2026
|
104.1
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104.1
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Jan-2026
|
EURIBOR + 4.000%
|
||||
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Total Super Senior Debt
|
104.1
|
104.1
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0.5x
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0.5x
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||||
|
1L EUR Reinstated Notes due 2026 1
|
739.5
|
739.5
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Apr-2026
|
8.000%
|
||||
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1L CHF Reinstated Notes due 2026 1
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20.6
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20.6
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Apr-2026
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|||||
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Total Opco – 1st Lien Secured Debt
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760.1
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760.1
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3.8x
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3.8x
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||||
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2L EUR Reinstated Notes due 2026 2
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332.1
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332.1
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Jul-2026
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10.000%
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||||
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2L CHF Reinstated Notes due 2026 2
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9.3
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9.3
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Jul-2026
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10.000%
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||||
|
Total Opco – 2nd Lien Secured Debt
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341.4
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341.4
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5.3x
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5.3x
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||||
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Factoring and Reverse Factoring Liabilities
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4.3
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4.3
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||||||
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Other Finance Debt 3
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57.1
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57.1
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||||||
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Total Other Debt
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61.4
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61.4
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5.6x
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5.6x
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||||
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Finance Lease Liabilities
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24.7
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24.7
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||||||
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Operating Lease Liabilities
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125.2
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125.2
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||||||
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Total Lease Liabilities
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149.9
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149.9
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6.3x
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6.3x
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||||
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Total Debt
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1,416.9
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1,416.9
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6.3x
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6.3x
|
||||
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Less: Cash and Equivalents
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(39.9)
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(39.9)
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||||||
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Plus: Restricted Cash
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6.0
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6.0
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||||||
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Net Debt
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1,383.0
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1,383.0
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6.1x
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6.1x
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||||
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Operating Metrics
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||||||||
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LTM Revenue
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1,345.3
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|||||||
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LTM Reported EBITDA
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226.2
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|||||||
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Liquidity
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||||||||
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RCF Commitments
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150.0
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|||||||
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Less: Drawn
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(104.1)
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|||||||
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Less: Letters of Credit
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(3.1)
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|||||||
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Plus: Cash and Equivalents
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39.9
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|||||||
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Less: Restricted Cash
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(6.0)
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|||||||
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Total Liquidity
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76.7
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Credit Metrics
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||||||||
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Gross Leverage
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6.3x
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|||||||
|
Net Leverage
|
6.1x
|
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Notes:
LTM reported EBITDA is the company’s adjusted EBITDA. €3.1M letters of credit reflects RCF used for bank guarantees and €6 million restricted cash. 1. First Lien Notes: Until (but excluding) January 2nd, 2023: 3.500% per annum, payable in cash, plus in kind at a rate of 4.500% per annum by increasing the principal amount of the outstanding Notes or issuing additional Notes in a principal amount equal to such interest. From (and including) January 2nd, 2023: 8.000% per annum, payable in cash.% 2. Second Lien Notes: Until (but excluding) January 2nd, 2023: 10.000% per annum, payable in kind by issuing additional Notes in a principal amount equal to such interest. From (and including) January 2nd, 2023: per Interest Payment Date of January 3rd, 2023, Selecta has taken the decision for 10.000% per annum, payable in kind by issuing additional Notes in a principal amount equal to such interest. For future Interest Payment Dates, Selecta’s options to pay interest are as follows: (A) all interest as payment in kind at 10% (by increasing the principal amount of the outstanding Notes or issuing additional Notes in a principal amount equal to such interest), (B) all interest as cash at 9.25% or (C) combination of interest as payment in kind (10%) and Cash (9.25%), whereas Selecta must advise of the split % between payment in kind and cash. 3. Sum of accrued interests and other financial debt |
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