Sungard AS expects BAU throughout pre-packaged chapter 11

On the back of this week’s announcement of Sungard Availability Services’ Chapter 11 filing in the US, the global recovery services provider has said it expects customers to be unaffected by the capital restructure that will see the company’s debt reduced by two-thirds, following a consensual agreement with creditors.

“A diverse group of lenders came together very quickly, reaching an agreement that results in an appropriate capital structure that enables us to continue focusing on operating and growing our business,” CEO Andrew Stern said. “Our creditors recognise the value in what we’ve built, and are investing new capital into the business. Sungard AS will emerge from this process as a much stronger company, continuing to service existing and new customers well into the future.”

On Monday, April 1, 2019, Sungard AS published a notice to its investors announcing a RSA with a majority of its creditors and the company’s equity sponsors to restructure and reduce its debt. In order to effectuate the reduction in debt, the company will enter a “pre-packaged” chapter 11 bankruptcy filing on or around May 1. With over 75% of the secured lenders and over 85% of the noteholders already committed to vote to accept and/or support the plan, Sungard AS expects to emerge from bankruptcy very shortly after filing. It is expected that the company will be in bankruptcy for somewhere between 24 to 48 hours.

The restructuring contemplated by the Restructuring Support Agreement (RSA) is funded by a US$100m credit facility, which will provide the liquidity necessary to continue to implement the business plan, including funding working capital and operational and capital expenditures during the expedited restructuring process. Once the restructuring is complete, Sungard AS’ creditors will own the company’s equity.

CIR understands that the restructuring won’t affect the UK organisation, which will be business as usual.

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