Europcar debt restructuring proceeds as planned; creditors approve safeguard

The debt restructuring of Europcar Mobility Group SA is proceeding as planned, with the company announcing that the financial lenders' committee and the bondholders’ general meeting approved, by the requisite majorities, the draft accelerated financial safeguard plan. The next stage of the process is Jan. 20, when shareholders will meet to vote on all the resolutions required to implement the plan.

The latest development will not have come as a surprise, given that Europcar agreed the debt restructuring — which is a debt-for-equity swap — in principle with creditors on Nov. 26, 2020. Then on Dec. 14, 2020, the Paris Commercial Court opened financial safeguard proceedings to enable the firm to implement the debt restructuring.

The deal includes €475 million of new money and a debt reduction of €1.1 billion by fully converting the borrower's existing unsecured €600 million of 4.125% notes due 2024, the €450 million of 4% notes due 2026 and the €50 million Credit Suisse facility into equity.

Holders of Europcar's bonds, including Anchorage Capital Group, Attestor Ltd., Diameter Capital Partners, King Street Capital Management and Marathon Asset Management, will become new shareholders of the company via the debt-for-equity swap. Shares of incumbent private equity stakeholder Eurazeo, which holds 29.9% of Europcar, will be diluted.

Existing creditors have also backstopped €250 million of new-money equity, which will be raised via a €50 million rights issue (with preferential subscription rights for existing shareholders) and a €200 million share capital increase, reserved for holders of the 2024 and 2026 notes. Penny warrants of €5 million will also be issued.

In addition, the bondholders have backstopped €225 million of new money for a new revolving fleet financing due December 2024.

Creditors will refinance the existing €670 million revolving credit facility, or RCF, via issuance of a new €170 million RCF and a new €500 million term loan facility due June 2023. The firm expects to draw roughly €133 million of the new RCF.

Roughly €285 million of state-guaranteed loans that Europcar received in 2020 will remain in place, leaving total drawn debt of €918 million in place post-restructuring, down from €2.018 billion currently.