Yak Access second lien lenders have organized with Ropes & Gray as legal counsel, according to two sources familiar with the situation.
The congregation comes amid earnings pressure for the Platinum Equity-backed company. The provider of access mats – mostly used for pipeline and utility projects – has experienced earnings pain, given its exposure to the pipeline construction space.
For their part, an ad hoc group of the borrower’s term loan holders recently tapped legal counsel Akin Gump, as reported.
Liquidity has emerged as a pressure point for the company. Of note, the revolver carries a springing first lien net leverage test of 4x when more than 35% of the facility is drawn, the sources said. Yak ended the quarter with USD 27m in liquidity, including USD 3.4m in cash and USD 23.7m in availability under the USD 125m revolver due 2023.
The latest results peg leverage at 4.5x based on USD 202.4m of LTM adjusted EBITDA through 2Q21 and USD 908.6m of total debt. Meanwhile, leverage through the first lien debt was 3.6x after accounting for USD 603.5m outstanding on the first lien term loan, USD 23.8m in equipment debt and USD 101.3m drawn on its ABL revolver, as reported.
For 2Q21, the borrower booked a 21% year-over-year EBITDA decline to USD 33m, as reported. Revenue for the three-month period skidded 36% YoY to USD 94m. The earnings erosion was due in part to lower mat utilization rates while two pipeline projects fell apart during the quarter.
The issuer’s USD 680m Libor+ 500bps term loan due 2025 is quoted 85/86.643, versus 92.036/93.214 on 12 August, according to Markit. Yak’s USD 180m L+ 1,000bps second lien term loan due 2026 is quoted 77/79.75, down from 81.5/83.7 on 13 August.
Yak and Platinum did not respond to requests for comment. Ropes & Gray did not respond to a request for comment.