Catalina Marketing, the unit of Checkout Holding Corp. historically known for doling out cash-register coupons, filed for bankruptcy to clean up its debt-plagued balance sheet.
The company, which filed for Chapter 11 protection in Delaware, said it has an agreement with over 90 percent of its most senior lenders that would cut its debt by about $1.6 billion. The court-supervised restructuring will allow the business to continue operating while aiming to trim the company's debt load to around $280 million of secured debt upon emergence, from $1.9 billion, according to court filings.
Catalina, owned by private equity firms Berkshire Partners LLC and Hellman & Friedman LLC, was founded in 1983 and became so familiar to shoppers that "Catalina coupons" is now a synonym for discounts doled out on store receipts. The St. Petersburg, Florida-based company has handled thousands of products ranging from Febreze to Fritos in the U.S., Europe and Japan.
But marketing dollars have become scarce, and the company has been shifting its focus to digital apps that zero in on individual users to customize discounts based on their past purchases. It's also tracking consumer habits for use by retailers and packaged-goods companies, saying it possesses "the largest shopper history database in the world" -- a potentially valuable asset for creditors.
The company obtained commitments for $125 million in new debtor-in-possession financing from its current term-loan lenders as well as a $40 million exit facility to support the company through and after its restructuring, according to a news release. Catalina will also receive $150 million of existing first-lien debt that is rolled into the DIP. The company says it aims to complete the court-supervised process "expeditiously" with a confirmation hearing set for the end of next month.
Under the terms of the pre-negotiated plan of reorganization, Catalina's first-lien lenders would receive 90 percent of the reorganized equity, while second-lien holders would take the remaining 10 percent. The deadline for lenders to vote or object to the debtors' plan is scheduled for Jan. 23.
For the purposes of reorganization, Catalina's financial adviser Centerview Partners Holdings LP, estimates that the company's equity value after emerging from bankruptcy would be between about $179 million to $449 million, according to a filing. The enterprise value, which includes debt, would be in the $460 million to $730 million range with a midpoint of $595 million.
In October, Catalina named Gerald Sokol as its chief executive officer, describing him in a statement as a turnaround expert with experience in restructuring debt. Sokol's most recent role had been Amtrak's chief financial officer, and he previously was CEO at Vertis Communications, a printing and targeted direct marketing company that he led through a restructuring, Catalina said.
The company is being advised by law firm, Weil Gotshal & Manges LLP, Centerview, as financial adviser, and restructuring adviser, FTI Consulting Inc.