& Case Studies

September 2016

$2 billion debt restructuring

Restructuring and Recapitalization
Exclusive Financial Advisor to the Ad Hoc Group of Second Lien lenders on Templar Energy’s $1.45 billion out-of-court exchange offer

On September 21, 2016, Templar Energy, LLC (“Templar”), an oil and gas exploration and production company focused on the U.S. mid-continent region, completed its out-of-court restructuring and recapitalization. Acting as the company’s exclusive financial advisor, Moelis & Company’s involvement resulted in 100% of lenders consenting to an exchange offer and avoiding a potentially lengthy and costly in-court Chapter 11 bankruptcy.

Initially backed by financial sponsors First Reserve and Trilantic, Templar established a quality acreage position in the mid-continent in 2013-2014. This was done through a series of acquisitions financed with the issuance of $1.45 billion of second lien term loans. Shortly thereafter, precipitous decline in oil and natural gas prices rendered the company’s overlevered balance sheet unsustainable. In late 2015, Templar approached its second lien lenders regarding the formation of an ad hoc group, who subsequently hired Moelis & Company to advise on restructuring conversations.

Moelis & Company performed extensive diligence on the company’s asset base and operational capabilities and advised its clients that the company was better suited for a debt-to-equity exchange versus accepting a cash tender offer. The Firm negotiated a comprehensive restructuring solution, crafting the ultimate deal construct that provided the second lien lenders with the majority of new money investment rights (60%) and effective control of the company’s board.

Ultimately, Templar received total new money investment of $365 million and used the proceeds for the second lien cash payment and to pay down its first lien lenders, resulting in a substantially delevered company with ample liquidity. Through the debt-to-equity exchange and new preferred equity investment, second lien lenders own over 80% of the pro forma equity. They received $133 million of cash, 45% of the equity in the reorganized Templar (after dilution) and the participation rights in a fully-backstopped rights offering of participating preferred equity.

July 2016

$2.4 billion

Chapter 11 Reorganization
Exclusive Investment Banker to Dex Media Inc. on its $2.4 billion Prepackaged Chapter 11 Plan of Reorganization

On August 1, 2016, Dex Media, Inc. (“Dex”), one of America’s largest providers of marketing solutions for local businesses, announced that it had completed its financial restructuring and emerged from Chapter 11 bankruptcy. Moelis & Company acted as the exclusive investment banker to Dex and played a critical role in helping the company emerge from bankruptcy protection after only 77 days.

At the time, Dex’s primary historical marketing product, yellow page directories, had been experiencing significant double-digit top-line declines in the face of burgeoning internet directory and customer review-based businesses (e.g. Google, Yelp and Angie’s List) as well as the aging of the product’s core demographic. In reaction to those trends, Dex developed and marketed digital advertising solutions, but the transition to digital products was slower than originally anticipated.

As a result, Dex effectuated a merger with Supermedia Inc. through concurrent Chapter 11 bankruptcies in an effort to combat industry dynamics through consolidation. The company emerged with four cross-collateralized secured credit silos creating a complex capital structure, which impeded management’s ability to operate the business as a unified company. In addition to the first-lien secured debt of approximately $2.1 billion, the company also had unsecured notes of $270 million. At the end of 2016, Dex faced a maturity wall and leverage levels would not support a complete refinancing of commitments.

Moelis & Company negotiated a significant deleveraging of the company in order to afford the company the financial flexibility to achieve its strategic plan. The plan was a fully-consensual prepacked plan of reorganization, which provided for the first-lien lenders across the four credit silos to own 100% of the reorganized equity and $600 million of loans under the new credit facility. Dex’s unsecured noteholders also received a $5 million cash payment and warrants to purchase up to 10% of the reorganized  equity in exchange for their approximately $270 million in claims.

The company’s strengthened capital structure, with approximately $1.8 billion less total debt, created significant financial and strategic flexibility. Furthermore, the transaction enabled the company to deepen its commitment to help local businesses thrive by developing and providing marketing solutions to help them grow their organizations.

February 2016

£800 million

Initial Public Offering of portfolio company Ascential plc
Exclusive Financial Advisor to Guardian Media Group Plc on its £800 million initial public offering of portfolio company Ascential plc

On February 8, 2016, Ascential plc announced the successful pricing of its initial public offering at 200p per share, giving the company a market capitalization of £800 million. Moelis & Company acted as the independent advisor to Guardian Media Group (GMG) on Ascential’s IPO, which resulted in total proceeds of £322 million, including the greenshoe.

Ascential, an information and events company jointly owned by Apax Partners and GMG, operates through two segments: Exhibitions & Festivals and Information Services. The company owns a portfolio of businesses including the Cannes Lions advertising festival, the financial services event Money 20/20 and the global fashion trend forecasting service WGSN.

Conditional trading commenced on the London Stock Exchange on February 9, 2016 under the ticker ASCL. Moelis & Company advised GMG in relation to the initial price range of 190p – 220p and the stock traded up +1.0% to 202p at the opening of trading in the context of highly volatile markets. The valuation at the IPO price was in line with key peers. Of the £322 million of proceeds raised, £122 million were secondary proceeds and £200 million were primary proceeds, reducing leverage from 4.8x to 2.6x 2015 EBITDA.

The IPO represented a comeback to the public markets for Ascential, which was acquired by GMG and Apax Partners LP for £1.0 billion in 2008. Moelis & Company acted as the independent advisor to GMG in relation to its partial exit from Ascential, advising first on the M&A alternative and subsequently on Ascential’s IPO.

February 2016

$13.3 billion

Merger with Sirona Dental Systems Inc.
Exclusive Financial Advisor to DENTSPLY International Inc. on its $13.0 billion merger with Sirona Dental Systems Inc.

On September 15, 2015, DENTSPLY International Inc. (“DENTSPLY”) (NASDAQ: XRAY), one of the world’s largest manufacturers of consumable dental products for the professional dental market, and Sirona Dental Systems Inc. (“Sirona”) (NASDAQ: SIRO), a global dental technology leader, announced that the Boards of Directors of both companies unanimously approved a definitive merger agreement to combine the companies in an all-stock merger of equals. This combination created the world’s largest manufacturer of professional dental products and technologies with net revenue of approximately $3.8 billion and adjusted EBITDA of more than $900 million.

Moelis & Company served as the exclusive financial advisor to DENTSPLY and led the company in all aspects of the transaction. Narrowing in on the essential elements unique to this client, Moelis & Company advised on the negotiation of key economic, managerial and social deal terms, post-close capital allocation strategy and messaging of the deal announcement to the Street. Under the terms of the agreement, Sirona shareholders received 1.8142 shares of DENTSPLY for each existing Sirona share, reflecting an “at market” exchange ratio. At closing on February 29, 2016, DENTSPLY shareholders owned 58% and Sirona shareholders owned 42% of the combined company in a tax-free merger.

The combined company, supported by its leading platforms in consumables, equipment and technology, offers an enhanced set of complementary offerings and end-to-end solutions that will advance patient care. Customers across the globe will now be supported by the largest sales and service infrastructure in the industry to deliver an optimized product range that will meet the increasing global demand for digital dentistry and integrated solutions. In an industry that is increasingly consolidating, the DENTSPLY/Sirona merger represented an opportunity for both companies to gain scale, increase product breadth and increase shareholder value. The transaction is expected to have over $125 million of annual pre-tax synergies by the third year and to be accretive to both sets of shareholders within the first year after close.

The deal builds on Moelis & Company’s track record of delivering differentiated advice to public company boards while maintaining confidentiality. This transaction represents the largest dental transaction in history.

December 2015

$4.2 billion

Chapter 11 Reorganization
Exclusive Financial Advisor to LightSquared Inc. on its $4.2 billion Chapter 11 Reorganization

On December 7, 2015, LightSquared Inc. successfully consummated its Chapter 11 Plan of Reorganization (the “Plan”), which was the culmination of extensive negotiations and litigation among the major constituents in the Chapter 11 case. Prior to the Chapter 11 filing, Moelis & Company pursued an exhaustive strategic and financial investor process to find the right solution for its client and led intensive negotiations to execute an out-of-court restructuring. Due to the opposition of several large holders, LightSquared was forced to file for Chapter 11 to maintain control over its assets.

When LightSquared set out to launch a nationwide, wholesale wireless LTE network, federal regulators denied attempts to clear the Plan, citing concerns about potential GPS interference. As a result, LightSquared was forced to file for Chapter 11 protection in May 2012 with $2.3 billion of debt. Moelis & Company was hired as the exclusive financial advisor to the company, and ran extensive multi-party negotiations over more than three years, evaluating over a dozen plans of reorganization filed with the U.S. Bankruptcy Court.

These extensive discussions resulted in a near-fully consensual plan of reorganization, offering full recovery to all existing debt and preferred equity holders. Moelis & Company also evaluated and assisted in the raising of over $3.5 billion of new debt and equity capital, numerous rounds of DIP financings, and served a critical role in a seven-month mediation process. Moelis & Company provided an expert valuation report as well as extensive trial testimony in support of the Plan and related financings that served as the centerpiece of the Plan confirmation. Additionally, the Firm submitted at least three formal valuation reports and provided testimony in support of multiple Plan proposals and deposition testimony on a number of matters at least nine times during the course of the Chapter 11 proceedings.

LightSquared pursued the confirmed Plan in partnership with an investor group, including Fortress Credit Opportunities Advisors LLC, Centerbridge Partners, L.P., JPMorgan Chase & Co., and Harbinger Capital Partners LLC. Among other features, the Plan provided for the full satisfaction of all claims and preferred equity interests, $3.5 billion in aggregate new-money debt and equity investments, and the installation of a world-class board of directors chaired by former Verizon Chairman and CEO Ivan Seidenberg.

LightSquared emerged from bankruptcy with $4.6 billion of new and rolled debt financing which provided over $900 million of cash. This allowed the company to pursue alternative investment opportunities and capitalize on its valuable wireless spectrum licenses.

December 2015

£13 billion

Sale of an asset portfolio to affiliates of Cerberus Capital Management LP
Financial Advisor to UK Financial Investments Limited on UK Asset Resolution Limited’s sale of an asset portfolio to affiliates of Cerberus Capital Management LP

On November 13, 2015, UK Financial Investments Limited (UKFI) announced that UK Asset Resolution Limited (UKAR) would sell a £13.0 billion asset portfolio to Cerberus Capital Management LP (“Cerberus”). Moelis & Company acted as the financial advisor to UKFI on this record-breaking sale of mortgages which had been taken into public ownership nearly a decade earlier.

As part of the U.K.’s response to the financial crisis and in order to manage the Governments interventions, UKFI was set up in 2008. UKFI’s objective is to implement a strategy for realizing value for the government’s holdings over time in an orderly and active way, consistent with its view that it has no wish to be a permanent investor in U.K. financial institutions. UKAR was established in 2010 as a holding company to integrate the administration and servicing of the legacy mortgage businesses of NRAM (previously known as Northern Rock Asset Management plc) and Bradford & Bingley plc.

The UKAR portfolio sold to Cerberus in this transaction comprised of mortgages and unsecured loans from the legacy book of NRAM, the former Northern Rock mortgage business. This highly competitive process resulted in UKAR achieving a £280 million premium over book value. As part of the transaction, TSB Bank acquired £3.3 billion of mortgages and loans from Cerberus, adding 34,000 customers across the U.K.

The sale brought the total UKAR balance sheet reduction to £73.5 billion (63%) and meant that the government had exited over 85% of Northern Rock whilst delivering value-for-money for the taxpayer.

This marque transaction, completed in May 2016, received accolades from U.K. Chancellor George Osborne, who called it a “major milestone in clearing up the mess left by the financial crisis, with the sale of former Northern Rock mortgages.” It currently represents the largest financial asset sale ever by a European government.