Ascent Capital Group announced last week that its wholly-owned subsidiary, Monitronics International, plans to file for Chapter 11 bankruptcy protection as part of a restructuring effort that will eliminate $885 million in debt from the company’s balance sheet.
Under the terms of the “Restructuring Support Agreement” that the company has entered into with its largest creditors, up to approximately $685 million of debt will be converted to equity, including up to approximately $585 million of the company’s 9.125% Senior Notes due in 2020 and $100 million of its term loans. Monitronics, which as rebranded as last year as BRINKS Home Security, will also receive an additional $200 million in cash from its noteholders through an equity rights offering and from Ascent, which is expected to merge with Monitronics upon completion of the restructuring.
Following the completion of the restructuring, the company is currently expected to have approximately $990 million of total debt. The company’s recurring monthly revenue as of March 31, 2019, was $40.8 million.
Monitronics said that it is “confident” that it will be able to meet its financial commitments and continue to operate its business as usual during the restructuring period.
“The restructuring announced today will give our Company the strongest balance sheet in our industry and, in doing so, will make us an even stronger competitor and partner,” Jeffery Gardner, President and CEO Monitronics, said in a statement. “With the support of our largest creditors now solidly behind us, we look forward to efficiently and definitively completing this debt restructuring, so we may realize our full potential for long-term growth and success.”
William Niles, CEO and General Counsel of Ascent, stated: “It was important to us to retain value for the Ascent stockholders, and the proposed Plan allows us to achieve this objective. If the restructuring is completed with the participation of Ascent, we believe Ascent stockholders will be able to benefit from their investment in what will then be a financially stronger and more competitive Monitronics.”
A new Monitronics Board of Directors will be appointed at the completion of the reorganization.
