Pandemic Slump Sends Travel Entertainment Biz Into Ch. 11
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Law360 (July 22, 2020, 9:47 AM EDT) — Pointing to the COVID-19 pandemic’s flattening of the world’s travel industry, California-based Global Eagle Entertainment Inc. sought Chapter 11 protection in Delaware early Wednesday for its on-the-road diversions business, lugging $856 million in secured debt and planning a sale.
The company and its 16 affiliates provide direct entertainment services to the airline, cruise and travel industries as well as internet services across the same sectors. Its initial Chapter 11 petition reported $630.5 million in assets against $1.086 billion in liabilities.
Company Chief Financial Officer Christian M. Mezger reported that Global Eagle had been on track for a profitable 2019, with 1.5 percent growth and an $88 million hike in free cash flow before the coronavirus calamity.
“However, the recent decline in demand for its customers’ services as a result of COVID-19, and the uncertainty regarding a potential resurgence of the pandemic, has had swift and negative impact on the company’s operations and cash flows,” Mezger said.
A restructuring support agreement with participating first-lien lenders calls for a “right-sizing” of the company’s capital structure, and would provide the business with $125 million under a “new money” credit agreement. The supporting first lien lenders also agreed to provide an $80 million “debtor in possession” bankruptcy financing loan.
Initial plans call for an auction around Oct. 10, with sale approval five days later.
The company’s main, first-lien debt is administered by Citibank NA and includes a senior secured term loan with a $503 million balance, maturing in January 2023 and an $81 million balance in a senior secured revolving credit agreement that matures in January 2022.
Those in its capital structure with more than 5% voting power include Nantahala Capital Management LLC, ABRY Partners LLC, Searchlight II TBO-W LP and Frontier Capital Management Co. LLC.
Pulled along with the case is a sizable list of unsecured creditors, led by an $82.5 million unsecured debt administered by U.S. Bank NA and $26.6 million in unsecured debt held by Luxembourg-based New Skies Satellites BV.
Global Entertainment is represented by Michael R. Nestor, Kara Hammond and Betsy L. Hammond of Young Conaway Stargatt & Taylor LLP and Ted A. Dillman, Helena G. Tseregounis and Nicholas J. Messana of Latham & Watkins LLP.
The case is In re Global Eagle Entertainment Inc., case number 1:20-bk-11835, in the U.S. Bankruptcy Court for the District of Delaware.
–Editing by Katherine Rautenberg.
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