Apax’s One Call Considers Competing Plans to Rework Debt

(Bloomberg) -- One Call Corp., the workers comp service firm backed by Apax Partners LLP, is in talks with creditors about options to rework its $2 billion debt load that could give lenders an ownership stake.

The privately held company is negotiating with separate groups of creditors on multiple proposals, the people said, asking not to be identified discussing a confidential matter. Proposals include swapping debt for equity, giving creditors control of One Call through a deal that could be executed in bankruptcy court, they said.

The goal is to line up enough creditor support to ensure a fast restructuring, with first-lien lenders potentially backing a debtor-in-possession loan, the people said. Negotiations are continuing, and the company and its creditors could still opt to execute a plan out of court.

Some creditors are looking at another plan that would partially pay down their first-lien debt holdings, with some of the remainder getting a higher interest rate and some bumped down to second lien, the people said. A majority of its junior debt would then be swapped for equity in the reorganized company, they said.

More Talks

“We continue to engage in collaborative discussions with our lenders to develop and implement a comprehensive capital structure solution that will best position One Call for the long term,” a representative for One Call said via email. “To achieve this shared objective, the parties are currently evaluating a range of options.”

A representative for Apax declined to comment.

One Call, based in Jacksonville, Florida, coordinates care for injured workers. It manages the delivery and scheduling of specialty health-care services and products through networks of contracted providers, according to its website.

A crossover group of holders including KKR & Co. and Blackstone Group Inc.’s credit arm GSO Capital Partners are working with financial advisers from Houlihan Lokey Inc., the people said.

Certain first-lien holders are also working with advisers at law firm Gibson Dunn & Crutcher LLP and investment bank Guggenheim Partners LLC, the people said. A third group of holders, mostly comprised of pay-in-kind notes, is working with law firm Akin Gump and Alvarez & Marsal Holdings LLC.

Representatives from the investment and advisory firms declined to comment or didn’t immediately respond to messages.

Advisory Lineup

The company has been working with law firm Kirkland & Ellis LLP as legal counsel and Centerview Partners LLC as investment bank. One Call skipped an Oct. 1 interest payment on its 2024 second-lien notes and invoked a 30-day grace period to negotiate with its creditors.

Cash has been running short at One Call, which recently drew $50 million from its $56.6 million revolver, the people said. Leverage was around 6.95 times earnings at mid-year, bumping up against the 7-times limit in its lender agreement, they added.

It’s not the first time One Call sought a break from lenders. In February, the company reached a deal in which certain notes and term loans were exchanged for more secure debt, some with higher interest rates. The swap to first-liens for the new notes strengthened claims on assets for holders if One Call ran into difficulty in the future.

The deal loaded additional interest expenses on One Call, which was grappling already with too much debt and couldn’t keep up with payments, the people said. High leverage also made it difficult for the company to attract new business and keep existing customers.

In the Chapter 11 scenario, all vendors and customers would be paid in full, and operations would continue without interruption, the people said.

©2019 Bloomberg L.P.

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