Truvo USA Files for Chapter 11 Protection in Bankruptcy Court in New York
Truvo USA LLC and four affiliates, publishers of printed and online directories, filed for bankruptcy citing a heavy debt load and declines in print advertising.
Truvo reached an agreement with senior lenders and noteholders on a debt restructuring plan, the company said in papers filed today in U.S. Bankruptcy Court in Manhattan. The company has about $1.9 billion in debt.
“The Truvo Group has been significantly affected by the continuing shift from print media toward online products,” Marc C.F. Goegebuer, Truvo USA’s chief financial officer, said in court papers.
The affiliates in bankruptcy are holding companies with no employees and no operations and depend on operating units to generate revenue, according to court papers and Sean O’Neal, the company’s bankruptcy attorney.
“What they do have is a fair amount of debt,” O’Neal said at a court hearing today before U.S. Bankruptcy Judge Arthur Gonzalez.
The markets for the company’s operating units, which aren’t in bankruptcy, are Belgium, Ireland and, through a joint venture, Portugal, according to court papers. Truvo also owns equity stakes in directory companies in South Africa and Puerto Rico.
Grace Period Expires
The holding companies filed for bankruptcy after a grace period expired today following a missed interest payment on its debt on June 1, O’Neal said.
At today’s hearing, Gonzalez approved a number of routine requests that will allow the company to continue operating while in bankruptcy, including a plan to spend the cash collateral of its lenders.
The restructuring plan calls for lenders on a 1.03 billion- euro ($1.28 billion) senior credit facility to receive substantially all the stock in two holding companies that will be the ultimate owners of Truvo USA, according to court papers. They also will receive new debt. The plan will cut the company’s debt to 450 million euros, O’Neal said.
Two groups of noteholders will receive 15 million euros in cash, plus warrants to buy stock in one of the holding companies, according to court papers. A group of lenders under a 130 million-euro loan also will receive warrants if they and the noteholders back the plan.
The company issued 395 million euros of 8.5 percent senior notes and $200 million of 8.375 percent senior notes, both due in 2014.
Lenders holding 75 percent of the senior credit facility and investors holding 15 percent of the notes have agreed to back the plan, O’Neal said. The company expects to file its bankruptcy plan by July 14. It will return to court on Aug. 5 to ask Gonzalez to allow creditors to vote on the plan.
The plan “represents the best prospect for restructuring the Truvo Group’s balance sheet, maximizing recovery for creditors, and implementing the new business transformation plan,” Truvo said in court papers.
The case is In re Truvo USA LLC, 10-13513, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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