Abraxas Group’s Restructuring Recap is a synopsis of recent articles touching on issues of value enhancement, restructuring and turnaround as they apply to middle market companies.

“Each company and each financing is different, and the process can’t be imitative”

– Michael Milken

Coal mine

How Big Coal summoned Wall Street and faced a whirlwind (Reuters).  The shifting fortunes of West Virginia’s Hobet coal mine illustrate the massive shifts experienced by the coal industry at large in recent decades.

middle-market-loan-yields

Lower Middle Market Pricing Tightens (S&P Global LCD Zone).  Supply and Demand dynamics are moving against lenders operating in the lower middle market, with first lien floating rate pricing down by more than 200 bps in the first quarter vs. the year ago period.  Despite these pressures, the middle market (defined here as companies with EBITDA <$50MM) continues to offer opportunities for lenders, with a 150 bps yield premium over the large corporate market (EBITDA >$50MM).

hospital-closed-rural

With Hospitals in Critical Condition, Can Rural America Survive? (Governing).  As the Affordable Care Act (ACA) accelerates the drive away from the fee-for-service model, rural hospitals are facing severe pressures, with nearly one in three being considered at risk of failure.

Claires bonds

Claire’s Corners Bondholders With $800 Million Debt Swap (Bloomberg).  Mall-based retailer Claire’s Stores, facing declining mall traffic, $500 million in losses over the last three years, and $2.5 billion in debt, is turning to bondholders for relief.  Supported by private equity owner Apollo Global Management, Claire’s has proposed a debt exchange that would impose a $570 million haircut on bondholders.

writ-of-certiorari

EFIH First Lien Trustee Petitions for Certiorari to Resolve Circuit Split over Pre-Plan Settlements (Weil Bankruptcy Blog).  The complexity and contentiousness of the Energy Future Holdings restructuring was already noteworthy, but the effort to restructure over $40 billion in debt may suffer a legal challenge that will rise to the U.S. Supreme Court.  While clarity on the matter of pre-plan settlements will be welcome among restructuring professionals, any ruling that restricts flexibility in negotiating settlements for complex restructuring cases such as Energy Future Holdings’ will further complicate these difficult cases.

About Abraxas Group

Abraxas Group is a boutique advisory firm focused on providing transformational leadership to middle market companies.  Founding Partner David Johnson has served as advisor or interim manager on over $5 Billion of distressed transactions, and is a recognized expert on the topics of value creation, change management, performance improvement, turnaround, and restructuring.  David Johnson can be contacted at david@abraxasgp.com or 312-505-7238.