Service King set to reach out-of-court debt settlement

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April 25, 2022—Service King is set to reach an out-of-court settlement to help pay off some of its debt, according to Quint of Bloomberg.

The auto collision repair business began facing major monetary problems in the third quarter of last year when Service King exhausted its sources of credit and then secured a $15 million loan from sponsors to support its operations.

The new proposal involves bondholders led by Clearlake Capital Group taking control and contributing $100 million. Clearlake and the company’s majority owner, Blackstone, Inc., declined to comment on the matter.

Service King has struggled to get back to business as usual as the effects of the pandemic have resulted in continued difficulties obtaining auto parts and accessing mechanics. Nevertheless, the deadline for paying off Service King’s debts is fast approaching.

“About $375 million of unsecured notes mature in October, and the company invoked a 30-day grace period after missing the April 1 interest payment.” The article says. “Service King is required to reduce its outstanding bonds to less than $135 million by July 1 or a term loan of $775 million may become due.”

The company had $75 million in restricted cash to repay its notes and, according to Bloomberg data, the $775 million loan maturing in December 2025 is quoted at 92 cents. The 7.875 notes due in October are trading at around 103 cents.

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