Sungard Availability Services (Sungard AS) announced that it has entered into a consensual agreement with a majority of its creditors to reduce Sungard AS’ debt by over two-thirds. This agreement creates a sustainable capital structure to support the Company’s investment and growth plans, as well as enhances its overall financial position.
“A diverse group of lenders came together very quickly, reaching an agreement that results in an appropriate capital structure that enables us to continue focusing on operating and growing our business,” said Andrew A. Stern, Chief Executive Officer, Sungard Availability Services. “Our creditors recognize the value in what we’ve built, and are investing new capital into the business. Sungard AS will emerge from this process as a much stronger company, continuing to service existing and new customers well into the future.”
According to Bloomberg News, the filing breaks the record for the fastest Chapter 11 approval; Less than 20 hours after the filing Judge Robert Drain approved the reorganization plan which will allow Sungard to reduce its debt by about two-thirds as it continues to operate.
Through the restructuring process, Sungard AS will continue to operate in the normal course of business, including delivering the high levels of service its customers expect and making planned investments in its fully resilient production and recovery solutions portfolio, all delivered by the Company’s team of seasoned professionals. The restructuring contemplated by the Restructuring Support Agreement (RSA) is funded by a $100 million credit facility, which will provide the liquidity necessary to continue to implement the Company’s business plan, including funding working capital and operational and capital expenditures during the expedited restructuring process. Once the restructuring is complete, Sungard AS’ creditors will own the Company’s equity.
On Monday, April 1, 2019, Sungard AS published a notice to its investors announcing a RSA with a majority of its creditors and the Company’s equity sponsors to restructure and reduce its debt. In order to effectuate the reduction in debt, the company will enter a “pre-packaged” chapter 11 bankruptcy filing on or around May 1. With over 75% of the secured lenders and over 85% of the noteholders already committed to vote to accept and/or support the Plan, the Company expects to emerge from bankruptcy very shortly after filing.
During this process, Centerview Partners has been retained as investment banker to Sungard AS, Kirkland & Ellis LLP has been retained as legal counsel, and AlixPartners has been retained as the Company’s financial advisor.