Production equipment rental company VER Technologies HoldCo LLC announced on Thursday that it has filed for bankruptcy in Delaware to facilitate a merger with competitor Production Resource Group LLC and restructure its funded debt, which currently hovers just above $760 million.
VER Technologies said it has entered Chapter 11 proceedings after reaching agreements with key stakeholders on the framework of a restructuring plan that allows it to shed some of its old liabilities and marry up with another purveyor of electronic rental equipment used for large performances and events.
The company anticipates a rapid trip through bankruptcy, wherein it will continue to operate in the normal course while honoring obligations to its employees and vendors using up to $364.7 million in debtor-in-possession financing, VER said.
As a result of the Chapter 11 case, VER will be united with a complementary business that gives customers access to a larger array of equipment and services, the company said in a Thursday press release.
“VER remains a strong business with more customers than ever before, and a customer satisfaction rating that is highest in the industry,” CEO Digby Davies said in a statement. “The actions announced today will provide a stronger capital structure and sufficient cash to fund operations.”
Headquartered in Glendale, California, VER and its subsidiaries rent and provide support services for a variety of audio, video and lighting equipment. The company boasts having the world’s largest inventory of rental equipment for customers in the TV, cinema, live events, broadcast and corporate markets.
Beginning as a small operation in the 1980s, VER said in court filings that it expanded its business over three decades and grew to have 35 offices across North America and Europe.
After a leveraged buyout in 2014, VER said it ran into a laundry list of pocketbook-hitting problems, including the loss of relationships with some corporate customers, a $28 million jump in employee benefits and salary obligations, the purchase of $238 million in underutilized equipment, and other misses as far as matching the demand for company services. Its troubles came to a head last year as employees and clients fled in response to rumors of a company sale and a variety of other forces sapped away business opportunities, VER said.
Prior to completing merger discussions with PRG, the company underwent managerial changes and brought on advisers to negotiate deleveraging solutions with its lenders, GSO Capital Partners and Bank of America, it said.
In addition to negotiating the merger arrangement, the debtors secured additional prepetition financing from their term loan lenders and put together a DIP facility consisting of a $300 million senior secured superpriority asset-based loan and a $64.7 million priming second-lien term loan.
According to court documents, the restructuring support agreement will swap prepetition term loan debt for equity in a reorganized company.
The debtors are represented by Domenic E. Pacitti and Morton Branzburg of Klehr Harrison Harvey Branzburg LLP, and Joshua A. Sussberg, Cristine Pirro, James H.M. Sprayregen and Ryan Blaine Bennett of Kirkland & Ellis LLP.
The case is In re: VER Technologies HoldCo LLC, case number 18-10834, in the U.S. Bankruptcy Court for the District of Delaware.
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