Jack Cooper PIK, 9¼% noteholders enter restructuring support agreement

By Marisa Wong

Morgantown, W.Va., June 16 – Jack Cooper Enterprises, Inc. and Jack Cooper Holdings Corp. signed a definitive restructuring support agreement with an ad hoc group of holders of Jack Cooper Holdings’ 9¼% senior secured notes due 2020 on the terms of a consensual restructuring transaction, according to an 8-K filed Friday with the Securities and Exchange Commission.

Under the support agreement, Jack Cooper amended the terms of its offer to purchase any and all of Jack Cooper Enterprises’ outstanding 10½%/11¼% senior PIK toggle notes due 2019 for cash and the related consent solicitation to amend the PIK notes and related indenture and to a general release and waiver of claims as well as the offer to exchange any and all of Jack Cooper Holdings’ 9¼% notes for cash and class B common share warrants and the related solicitation of consents to amend the 9¼% notes and related indenture, release the collateral securing the 9¼% notes and consent to a general release and waiver of claims.

As previously announced, in conjunction with the amended offers, Jack Cooper is also soliciting votes to accept a pre-packaged plan of reorganization. The company filed a disclosure statement for the amended offers, consent solicitations and plan solicitation on Thursday, the filing noted.

On Monday Jack Cooper Enterprises extended the tender offer for its PIK notes, and Jack Cooper Holdings extended the exchange offer for its 9¼% notes. The offers expired at 5 p.m. ET on June 15 instead of 5 p.m. ET on June 12.

As previously reported, the company had reached an agreement in principle on a consensual restructuring with holders of an ad hoc group that owns 74.45% of the 9¼% notes and 14.63% of the PIK notes. The ad hoc group was working with other noteholders bringing the total ownership to 86.26% of the 9¼% notes and 42.16% of the PIK toggle notes.

To implement the restructuring, the offers were to be amended prior to the expiration date.

As of 5 p.m. ET on June 9, 53.92% of the PIK notes had been tendered, thereby satisfying the condition that the company receive consents from the holders of a majority of the PIK notes.

However, 0.77% of the 9¼% notes had been tendered as of 5 p.m. ET on June 9, meaning the condition that the company receive consents from the holders of two-thirds of the 9¼% notes had not yet been met.

The company said before that the amended offers will also continue to be subject to financing conditions.

Jack Cooper had begun the offers on April 3, and they were subsequently extended several times while discussions were under way.

Under the terms of the agreed restructuring, noteholders were being asked to tender their securities, deliver consents, agree to a forbearance and vote in favor of a plan of reorganization to be implemented through a pre-packaged Chapter 11 filing if the minimum tender condition is not met. The minimum tender condition required that 98% of each series of notes be tendered.

Holders of the 9¼% notes meeting these conditions, referred to as consenting holders, will receive $550 in cash per $1,000 principal amount plus warrants to purchase non-voting common stock equal to 10% of the common equity of Jack Cooper Enterprises on a fully diluted basis. The cash payment includes a $50 per $1,000 consent and forbearance payment.

Under the revised restructuring, the amount on offer had been increased from the originally proposed $350 in cash, which included a $50 consent payment, and 2.47 warrants to purchase class B common stock of Jack Cooper Enterprises per $1,000 principal amount.

Consenting holders of the PIK toggle notes who participated will receive $150 in cash per $1,000 of notes, including an $11.50 per $1,000 consent and forbearance payment.

The payment on offer for the PIK toggle notes is unchanged.

Members of the ad hoc group had agreed to tender their notes, deliver consents and vote in favor of the plan of reorganization.

As of 5 p.m. ET on May 30, the company had received tenders for 51.37% of the PIK toggle notes and none of the 9¼% notes.

The company had previously extended the offers to of 5 p.m. ET on May 31, 5 p.m. ET on May 22 and to 5 p.m. ET on May 15 from 12:01 a.m. ET on May 2.

The consent solicitation sought to amend the note indentures to eliminate substantially all of the restrictive covenants and some events of default. Jack Cooper Holdings also solicited consents to the release of the collateral securing its notes.

Eligible holders could not deliver consents without tendering their notes, and eligible holders could not tender their notes without delivering consents.

The consent deadline was 5 p.m. ET on April 17.

No accrued interest will be paid for either series of notes.

No fractional warrants will be issued. If an exchange would yield a fractional warrant, the company will round down to the nearest whole warrant.

The offers were conditioned on the receipt of the necessary consents and the receipt by Jack Cooper Holdings of enough net proceeds from an offering of new secured notes to fund the cash portion of the offers.

The companies planned to issue a new series of 13¾% senior secured notes due 2023 through one or more private placements and use the proceeds to fund the tender offer and the exchange offer.

On March 9, the companies entered into a term sheet related to the proposed private notes offering with Solus Alternative Asset Management LP. However, Solus did not commit to purchase the new notes.

The information agent and the tender and exchange agent is D.F. King & Co., Inc. (212 269-5550, 800 755-7250 or jc@dfking.com).

Jack Cooper is a specialty transportation and other logistics provider based in Kansas City, Mo.

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