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Carlson Travel unit CWT prepackaged reorganization plan nets confirmation

The bankruptcy court in Houston on Nov. 12 confirmed the reorganization plan of travel company Carlson Travel Holdings Inc., only one day after the company filed its prepackaged bankruptcy proceeding, the company announced.

The plan implements the company's previously disclosed recapitalization plan.

According to a news release, the plan provides the company with $350 million of new equity capital while eliminating roughly one-half of the company's $1.6 billion in debt.

More specifically, according to the company's disclosure statement, the reorganization plan contemplates the company raising the $350 million of equity capital through an equity rights offering and placement of direct allocation shares in consideration for issuing roughly 88.9% of its new common stock at a 25% discount to plan equity value of $525 million (subject to dilution from a management incentive plan and warrants).

In addition, the plan contemplates the issuance of $625 million in new exit debt (including $500 million issued pursuant to a debt rights offering to senior secured noteholders and $125 million either issued to the market or directly to senior secured noteholders), along with a new $150 million financing facility that will be undrawn at emergence, resulting in net debt of $625 million and an imputed total enterprise value of approximately $1.15 billion at emergence.

In terms of creditor distributions, the disclosure statement shows that holders of the company's new money notes issued in August 2020 as part of an exchange offer and restructuring at that time, currently outstanding in the amount of roughly $415 million, are to receive payment in full in cash, while holders of the company's USD senior secured 6.75% notes issued in the amount of $411 million and euro-denominated floating-rate senior secured notes in the amount of $325 million euros, also issued in connection with the 2020 transaction, would recover either $125 million in cash or in new first-lien debt, along with 100% of the reorganized company's new common stock (subject to dilution from the equity offering, the management incentive plan, and warrants), 100% of the subscription rights to purchase stock pursuant to the equity rights offering, and 100% of the subscription rights in the aforementioned $500 million debt offering.

According to the company's disclosure statement, the senior secured note recovery rate is 27.6%.

Holders of third-lien notes, meanwhile, allowed in the amount of $251.6 million, would recover warrants, a recovery rate pegged at 4%, according to the disclosure statement.

Existing equity will not see any recovery.

All of the company's bank group and holders of more than 90% of its secured debt backed the plan, the company said.

Kirkland & Ellis was the company's legal adviser, Houlihan Lokey its financial adviser, and AlixPartners LLP restructuring adviser. Shearman & Sterling was the company's corporate finance counsel.

Also involved in the case were Stroock & Stroock & Lavan and Paul Weiss Rifkind Wharton & Garrison LLP as legal advisers and Rothschild & Co. and Evercore as financial advisors to groups of CWT's noteholders.