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The Deal’s data experts compile and analyze the details of M&A, Private Equity, Bankruptcy, Out-of-Court Restructuring, PIPEs and Life Settlement transactions on an ongoing basis. League Table rankings are released quarterly and update cumulatively throughout the year. Any data provided by contributors is verified before consideration for The Deal’s League Tables.  Any firm contributing transaction details is encouraged to submit data as soon as a deal is announced to ensure they are counted in the quarterly updates.  Preliminary rankings are posted on the first business day of the new quarter.

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Q3 League Tables: A Somewhat Milder Restructuring Picture

By Stephanie Gleason | Published on October 1, 2020

The third quarter economy showed some improvement compared to the catastrophic second, but with widespread distress in a variety of industries, this period may have given us a glimpse of the Covid-19 normal.

FitchRatings said on Sept. 25 that it doesn’t expect widespread revisions of its initial “mass rating actions” that started in the second quarter.

“The risk of demand destruction will continue for the duration of the health crisis,” the rating firm said.

Later in the report it added: “Economic recovery has been swifter than anticipated after unprecedented contraction in March and April, but the pace of recovery is expected to moderate in the near term.”

In the third quarter, out of court activity, including downgrades, forbearances and restructurings, gives us a peek at what may lie ahead.

Perhaps the most obviously hampered businesses by Covid-19 are senior living centers. But Brookdale Senior Living Inc. was able to negotiate some relief during the third quarter.

The Brentwood, Tenn.-based company is the largest senior living facility operator in the U.S. with over 700 communities. It reached an agreement with its landlord, Ventas Inc., on the master lease agreement for 121 communities that reduced Brookdale’s annual payments by $100 million in exchange for about $235 million in cash and equity.

As restaurants remain extremely vulnerable, the operator of Fuddruckers chain received a going concern warning from auditors in July, as the company markets its assets for sale. The Houston-based Luby’s Inc. has said it will pursue a sale of its individual restaurant chain holdings and their related real estate assets.

Building materials company Associated Materials Inc., which produce vinyl windows, vinyl siding and accessories, and metal building products, successfully implemented a deal that converted $675 million in secured notes to equity while issuing $250 million in new debt, substantially reducing its leverage.

Another building material company Northwest Hardwoods Inc.–this one a hard wood miller–was downgraded by Moody’s Investors Service as it faces an untenable capital structure. It will need to restructure next year, the rating firm said.

And finally, a set of education companies were downgraded in August after they failed to put together a merger.

Cengage Learning Inc. and McGraw Hill LLC are up against substantial industry pressures and uncertainty around school enrollment during the Covid-19 pandemic, Moody’s Investors Services said.

Cengage’s products focus on higher education as a publisher of college textbooks, reference materials and digital information. The company exited Chapter 11 in 2014. McGraw Hill’s products are more widespread, targeting higher education, K-12 and professional learning.

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