By Giulia Rusconi, Jared Muroff, Bart Capeci, Reorg

To date, aggressive liability management exercises, or LME, involving, for example, uptiering and drop-downs have been common in the U.S. market while very limited in the European market. Reorg publishes a global quarterly report highlighting liability management exercises, or LME, used by stressed creditors to partially refinance capital structures. The report summarizes “aggressive” transactions completed by U.S. and European borrowers that, among other results, raise cash, extend maturities or reduce outstanding principal. Transactions typically result in participating stakeholders improving their ranking relative to nonparticipating creditors. For the third quarter, Reorg highlights LME transactions from Trinseo, Frontier Communications, Lycra and Ideal Standard. Details on Trinseo and Ideal Standard are below.

Trinseo

In early September, U.S.-based chemical company Trinseo announced the terms of a $1.077 billion financing transaction with a lender group including Oaktree, Angelo Gordon and Apollo with proceeds to be used to pay off its 2024 term loans in full and fund a partial redemption of approximately three-quarters of its senior notes due 2025. The new “pari-plus” financing included a number of interesting features including multiple guarantees, a drop-down of assets into an unrestricted subsidiary and a PIK-interest toggle.