Monitronics International, Inc., announced that it has entered into a Restructuring Support Agreement (“RSA”) with (i) lenders holding approximately 78% of the Company’s outstanding funded debt and (ii) holders of a majority of the Company’s equity to support an expedited restructuring that would reduce Monitronics’ debt by approximately $500 million and provide increased financial flexibility to the Company as it continues to deliver profitable growth.
The current lenders under the Company’s 2019 takeback term loan facility, including funds managed by Monarch Alternative Capital LP (“Monarch”) and Invesco Senior Secured Management, Inc. (“Invesco”) as the largest lenders, will become the new principal equity owners of Monitronics, providing the Company with additional support to execute on its business plan.
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The Company intends to implement the pre-negotiated restructuring contemplated by the RSA through a partially pre-packaged plan of reorganization effectuated through voluntary chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of Texas to be commenced on or around May 15, 2023. Pursuant to the RSA, the Company has already obtained the requisite support from its stakeholders to confirm the plan of reorganization (the “Plan”), and the Company expects to achieve Bankruptcy Court approval of the Plan and emerge from chapter 11 within approximately 46 days of filing.
“We are pleased to have reached an agreement with our lenders and shareholders to create a capital structure that is right-sized for our business model. Our new balance sheet will provide sufficient liquidity to grow our subscriber base at attractive returns and generate levered free cash flow,” said Monitronics Chief Executive Officer William Niles. “The strength of the underlying Monitronics business model positions us for success in a growing market. In 2022, we created 131,000 new subscribers at a 26x creation multiple while concurrently generating 55% EBITDA margins. Our Q1 2023 performance exceeded expectations and we are continuing to see tailwinds in our go to market channels.”
Monitronics has received commitments for approximately $387 million in new money financing during the chapter 11 cases from existing lenders, including $90 million in new money to fund the chapter 11 process and provide cash to the balance sheet as well as $297 million to refinance the Company’s existing Superpriority Revolving Credit Facility and Term Loan. The financing will fund Monitronics’ operations during the chapter 11 proceedings, including the payment of employee wages and benefits, suppliers, partners, and vendors in the ordinary course of business. The Company will emerge with approximately $600 million in exit financing.
SOURCE: Businesswire