Service King is working with PJT Partners as a financial advisor, according to four sources familiar with the matter. The company has also retained Kirkland and Ellis as counsel, two of the sources added.
Meanwhile, an ad hoc group of lenders has selected Evercore and Gibson Dunn to prepare for potential negotiations, as the auto repair company will face earnings erosion due to COVID-19 headwinds, as reported. A bondholder group has also formed with Houlihan Lokey and Akin Gump, as reported.
As of 28 March, the Blackstone and Carlyle-owned company’s leverage was 8x through the first lien and 12.1x total on an unadjusted EBITDA basis through USD 1.09bn of total debt, as reported. Giving credit for a total USD 44.7m of addbacks, leverage is 5.3x through the first lien and 8.1x total.
At the time, the company had a cash balance of USD 165m. It fully tapped its USD 100m revolver during 1Q after the start of the pandemic, as previously reported.
Service King initially declined to make a 1 April coupon payment to its bondholders, but paid the obligation within the 30-day grace period.
The USD 375m 7.875% senior unsecured notes due 2022 traded today at 85 to yield 16.135%, down from trades at 86.5 yielding 15.201% on 1 July, according to MarketAxess. The notes have trended lower over the last month after reaching as high as the 89 area.
The USD 600m Libor+ 275bps (1% floor) first lien term loan due 2021 is quoted in the 89.75/91.972 context today, in line with recent levels, according to Markit.
PJT declined to comment. Carlyle, Blackstone and Service King did not respond to requests for comment.