Service King paid its USD 14.8m bond interest payment due today (1 October) on its 7.875% bond, according to three sources familiar with the matter. 

Today’s payment comes shortly after the collision center company PIK’d a portion of a USD 15m interest payment that was due to the lenders on 22 September, opting to fund the remainder in cash, as reported.

The borrower’s USD 375m 7.875% senior unsecured notes due 2022 jumped today to 92.25 to yield 16.695% from trades at 83.5 to yield 27.674% on 23 September, according to MarketAxess.

The loan is quoted 95.813/97.063, compared to a 94.75/96.036 context last week and 94.938/95.938 level pre-earnings, according to a buysider.

To boost cash, Service King previously disclosed plans to draw down the remaining USD 22m of availability under its revolver.

The company reengaged Kirkland & Ellis as legal counsel and PJT Partners as a financial advisor to scope out balance sheet options, as Debtwire previously reported.

For its part, an ad hoc group of Service King lenders has regrouped with Evercore and Gibson Dunn, as reported. Meanwhile, Clearlake Capital, which has a significant stake in Service King bonds, has tapped Houlihan Lokey and Paul Weiss as legal counsel.

Service King ended 2Q with USD 71.8m in liquidity through USD 19.8m of cash and USD 52m of revolver availability, as reported. Subsequent to quarter-end, the company drew an additional USD 20m from its revolver, bringing liquidity down to USD 51.8m. The company has now fully drawn the facility.

Adding to balance sheet angst, there is also a minimum liquidity test of USD 35m that governs its revolver.

On an LTM basis through 2Q21, the issuer recorded unadjusted EBITDA of negative USD 15.1m. Including adjustments, the LTM figure totaled USD 5.5m. Meanwhile, pro forma further adjusted EBITDA, without a cap on addbacks — including USD 124.2m of COVID-related adjustments — amounted to USD 130.6m. Including the cap on adjustments, pro forma adjusted EBITDA came in at USD 22.7m, as reported.

Following the draw, leverage stands at 9.3x, through the USD 1.218bn of total debt and USD 130.6m of LTM 30 June adjusted EBITDA without a cap. Including a cap on adjustments, leverage totals 53.7x through USD 22.7m of adjusted EBITDA.

Messages left with the company were not returned.

2021 Debtwire