Baker McKenzie has advised the initial purchasers, solicitation agents and lenders in connection with the implementation of a new global funding structure by Encore Capital Group, Inc.'s (NASDAQ: ECPG), an international specialty finance company. The transactions closed on September 24, 2020.
Prior to this transaction, Encore’s two primary operating units, Midland Credit Management in the U.S. and Cabot Credit Management in the U.K., had legally separate funding structures. These funding structures have now been unified and Encore is now the parent of a restricted group consisting of all its subsidiaries against which all covenant performance is measured. Key transactions that closed in order to implement the new structure include the following:
• Encore issued €350.0 million aggregate principal amount of 4.875% Senior Secured Notes due 2025;
• Cabot Financial (Luxembourg) S.A. and Cabot Financial (Luxembourg) II S.A., indirect subsidiaries of Encore, obtained consents to certain amendments from holders of their outstanding £512.9 million 7.5% Senior Secured Notes due 2023 and €400.0 million Senior Secured Floating Rate Notes due 2024 to enlarge the restricted group to encompass Encore and its subsidiaries and amend and restate the existing intercreditor agreement for the new financing structure;
• an amended multi-currency revolving credit facility that formerly supported only Cabot that now supports the operations of the whole Encore group, with an increased total commitment of $1,050 million, an extension of maturity to 2024 and a broader credit support from Encore and its subsidiaries; and
• amending its outstanding privately placed notes to align the guarantors, security and certain of the covenants therein for the new financing structure.
In connection with the new financing transactions, Encore also entered into a $300.0 million stretch facility agreement which was cancelled on the closing date.
In connection with the Senior Secured Notes offering, Credit Suisse and Morgan Stanley were joint physical book-runners and joint global coordinators, DNB Markets, Fifth Third Securities, HSBC, ING, MUFG and Truist Securities were joint book-runners and joint global coordinators, and Citizens Capital Markets was joint book-runner.
The solicitation agents for the consent solicitation were Credit Suisse and Morgan Stanley.
The lead arrangers of the amended multi-currency revolving credit facility were DNB (UK) Limited, MUFG Bank, Ltd., Truist Securities, Inc., ING Capital LLC and Fifth Third Bank, National Association and the syndication agent was Citizens Bank, N.A.. The other lenders under the Amended Senior Facility Agreement were Bank of America, N.A., HSBC Bank plc, Umpqua Bank, Zions Bancorporation, n.a. (fka zb, n.a.) dba California Bank & Trust, Credit Suisse AG, Cayman Islands Branch and Morgan Stanley, Bank N.A.
The Baker McKenzie team was led by London based partners Rob Mathews, Haden Henderson, Nick O'Grady and David Becker and included Andrew Sagor (New York), Laurent Fessmann (Luxembourg), Amy Greer (New York), Peter Chan (Chicago), Patricia McDonald (Chicago), Kai Kramer (Houston), Geoff O'Dea (London) and James Smith (London), senior associates Ben Bierwirth (London), Nick Cusack (London), Samantha Greer (London) and Vadim Romanoff (London), associates Andrew J Brown (London), Lana Ahern (London), Connor Lovie (London), Mev Kilinc (London), Will Sugden (London), Amit Parekh (New York), Chen Tang (New York), Patrick Renckly (Houston), Alexis Bouvet (Luxembourg) and Aline Koenig (Luxembourg), and trainees Harriet Jupp, Clementine Metcalfe, Roma McCool, Kristin Gottschalk, Rory Tredwell, Ryan Elliot and Ola McClees (all London). Partners Adam Farlow and Sarah Porter, and associate Stefanie Lim (all London) represented Citibank, N.A., London Branch who acted as trustee of the Cabot Notes and the Notes, and Truist Bank who acted as security agent in connection with the New Financing Transactions. Partner Matthew Dening (London), of counsel Phung Pham (London) and associate Adam Gardener (London) represented the swap banks.
Mathews said: "It was great to be part of this transformative transaction for the Encore group. The deal provides a nice example of the firm’s ability to seamlessly deliver top service to its clients across multiple products (including credit facilities, high yield bonds, hedging and agency) and jurisdictions (including the US, U.K. and Luxembourg)."
Encore used the proceeds from the transactions to repay a portion of amounts previously drawn under the senior facility agreement, repay amounts drawn under the Encore existing senior facilities, prepay a portion of the Encore's privately placed notes and pay certain transaction fees and expenses incurred in connection with the transactions.