Fitch: US First, Second-Lien Tug-of-War Affects Restructuring
The following is from Fitch Ratings on November 17:
The tug-of-war between first- and second-lien lenders is influencing the current restructuring landscape for U.S. leveraged loans, according to Fitch Ratings. Negotiation points have varied substantially, depending on the specific documentation included in credit, collateral, and intercreditor agreements.
Second-lien loans are a common component in the capital structures of leveraged names; 26 percent of the issuers within the U.S. institutional leveraged loan market have second-lien debt. The security interest provided by the collateral makes second-lien loans more appealing for investors than unsecured notes.
An intercreditor agreement is the backbone defining the relationship between first and second lien lenders. Typically in an intercreditor agreement, second-lien lenders can contract away certain rights including the right to contest debtor-in-possession (DIP) financings already accepted by the first-lien lenders, certain rights associated with plan confirmation cramdown, the right to provide DIP financings without the consent of the first-lien lender, and the right to contest Section 363 sales already accepted by the first-lien lenders. The strength of second-lien lenders' claims in bankruptcy hinges largely on what rights they contracted away.
However, second-lien lenders normally retain a set of unsecured creditors' rights carved out in the intercreditor agreement. The breadth of the carveouts can substantially affect the rights of first-lien lenders in case of bankruptcy. A broad carveout can give second-lien lenders rights that are otherwise abrogated by the intercreditor agreements.
The recent court decision regarding Momentive highlighted the importance of a clearly drafted intercreditor agreement when considering distinct creditors' rights in bankruptcy proceedings. The Momentive decision is the latest of several relevant cases illustrating that not all second-lien loans are created equal. The strength of drafting language and compromises clearly delineated in the intercreditor agreement can result in different outcomes for second-lien lenders in bankruptcy.
First-lien lenders usually bear the burden of providing clearly drafted clauses. Second-lien lenders are likely to be given more creditors' rights than originally negotiated for when there is ambiguity in interpreting the extent of waivers and compromises reached between first- and second-lien lenders.
The traditional first-lien/second-lien structure usually has separate sets of documents for each lender in the structure. On the other hand, unitranche loans are a variation of first-lien/second-lien loans and combine senior and junior tranches into one single tranche with one set of documents. Therefore, in terms of intercreditor negotiations, the traditional first-lien/second-lien structure affords more flexibility than unitranche loans but the unitranche loans offer simpler documentation and lower transaction cost.
Additional information is available on fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at fitchratings.com. All opinions expressed are those of Fitch Ratings.
Intercreditor Arrangements (Tug-of-War Between First-Lien and Second-Lien Lenders)
https://fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863050
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Alexandra Scarborough
Gilt and Sarah Jessica Parker Unveil SJP by Sarah Jessica Parker Bridal Collection for SpringSarah Jessica Parker, in partnership with Gilt, kicked off the exclusive launch of SJP by Sarah Jessica Parker Bridal, Gilt’s first foray into bridal ready-to-wear that would have Carrie Bradshaw swooning.
The collection includes dresses, skirts, bodysuits and other pieces, ranging in price from $295 to $2,395 and from sizes 0 to 14.
"Collaborating with Gilt on my first bridal ready-to-wear collection was an opportunity I couldn't pass up," said Sarah Jessica Parker. "The team there is brilliant and allowed me to be imaginative and take risks as I was designing for the non-traditional bride. It has been quite fun to play around with colors, fabrics and details to create unique pieces for all kinds of brides." The collection, comprised of ten styles, is inspired by Parker's vision of a modern, non-traditional bride, and is designed to dress a woman for a variety of wedding milestone moments; from her bridal shower through her wedding reception. Styles offered are a unique mix of classic dresses and gowns, modern bodysuits, full skirts, and a jumpsuit. The color palette includes traditional bridal white, sleek black, plus pops of blush, poppy, light gray and blue.
Designed in collaboration with Gilt, the collection was produced in New York City utilizing fabrics like cashmere and stretch crepe sourced from Spain, Italy and France.
The pieces all feature carefully curated details like elegant bows, sophisticated cutouts, feathers, intricate embroidery and beautiful hand-stitched beading.
The actress and style icon is no stranger to chic bridal wear. Carrie Badshaw, famously played by Parker, took part in an elaborate bridal photo shoot in Sex and the City: The Movie. The shoot featured gowns from designers like Christian Lacroix and Lanvin. Parker famously wore a black wedding gown for her own wedding to Matthew Broderick in 1997.
"Not only is Sarah Jessica Parker's style known around the world, her point of view is one-of-a-kind," says Tom Ott, Chief Merchant of Gilt. "Sarah Jessica brings her impeccable taste and fashion sensibility to life in this collection. We think our customers will be delighted with the offering which is stylish and well-priced in the bridal category."
As part of the bridal launch, Gilt will also offer 15 exclusive styles from the SJP by Sarah Jessica Parker footwear line, each of which are complementary to the bridal collection.
To correspond with the bridal collection launch, Gilt City will present offers from some of Sarah Jessica Parker's favorite places in New York City.
The offers were each chosen as a way to help brides plan for and celebrate the big day with highlights including, Leather Spa, Lars Nord Studio Tailoring, Mah-Ze-Dahr Bakery, among others.
More Information:
http://www.Gilt.com/SJP -
Alexandra Scarborough
Tea Forté Introduces ‘Matcha’ CollectionConvenience meets tradition in Tea Forté’s new Ceremonial Matcha Bowl Set and the Matcha Single Steeps.
The company said its spring harvested, shade grown, stone ground, organic matcha tea is best served in a centuries-old Japanese tea ceremony called chanoyu: a preparation technique known for its centering meditative qualities.
"The launch of Tea Forté's Matcha collection represents our continued commitment to wellness and cultivating all the potential mental and physical health benefits of tea," says Tea Forté CEO Michael Gebrael. "In addition to our high quality Pure Matcha, we've also blended four distinct flavored Matcha varieties. Prepackaged in pouches measured out for a single serving, our Single Steeps Matcha is ideal for the office, travel, or to keep with you for a boost anytime."
Tea Forté noted its handcrafted ceremonial tea bowl, handmade bamboo whisk and measuring ladle “encourages serene enjoyment of our premium Kosher, gluten-free and vegan matcha blends.” These include: Pure Matcha, Chocolate Matcha, Coconut Matcha, Ginger Matcha, and Chai Matcha.
According to a release, in addition to its distinctive taste, matcha is prized for its health benefits. Steeped green tea contains only the antioxidants that can be extracted in water, while with matcha, the whole leaf is consumed.
Available now in select stores and online at teaforte.com.
QUICK 5
Expedia.com has released a year-end look at U.S. traveler behavior and trends for 2017, analyzing data to identify the most in-demand destinations, hotels, activities and more.
Among other insights, the roundup revealed:
- Labor Day was the busiest weekend for car rental
- Disney Theme Parks topped the list of things to do
- The average hotel stay was two nights
- Top destinations based on 2017 air travel included major global cities like New York, London and Bangkok
- Popular tourist destinations included Orlando, Cancun and Las Vegas