Atento enters restructuring support agreement

Atento announced that, following its announcement on June 23 regarding its entry into a term sheet providing for a new interim financing of at least $30M and a path to a comprehensive restructuring transaction to significantly deleverage its balance sheet, Atento has entered into a binding restructuring support agreement with an ad hoc group of financial stakeholders representing more than 75% of its $39.6M senior secured notes due 2025, 40% of its $500M senior secured notes due 2026, 100% of its currently outstanding New Money 2025 Notes and 100% of its currently outstanding Junior Lien 2025 Notes.The terms of the proposed restructuring are set out in the restructuring term sheet appended to the restructuring support agreement. If implemented in line with the term sheet, the restructuring would involve the following changes to the group’s capital structure: anticipated net debt leverage ratio of approximately 1.0x or lower following completion of the restructuring; the injection of new interim financing of at least $30M through the issuance of new money notes due 2025 in tranches over time, the first tranche of which for $17M was funded on June 30; the exchange of certain senior secured notes due 2026 for new notes due 2025 (“Junior Lien 2025 Notes”) secured on a junior lien basis to the existing 2025 notes and new money 2025 notes, and which will be equitized into 100% of the restructured equity, subject to dilution; the provision of up to US$79 million in additional new money investment at emergence from the proposed restructuring, which is expected to be in the form of preferred shares in the restructured business and subject to modifications necessary to obtain commitments for the Exit New Money, the lender under Atento’s super senior revolving credit facility, the providers of Atento’s cross-currency rate swaps and the holders of Atento’s $500M senior secured notes due 2026 receiving five-year warrants for 10% of the fully-diluted restructured equity at an exercise price representing a 5x multiple on invested capital. In the restructuring support agreement, Atento and the participating financial stakeholders that have executed or acceded to the restructuring support agreement have agreed, subject to the terms and conditions of the restructuring support agreement, to provide support for the restructuring and to facilitate the implementation of the restructuring, including by voting in favour of the proposed restructuring at any creditor meetings and not taking, or instructing any other person to take, any enforcement action or pursuing any other available remedies against Atento or any other group company. The restructuring support agreement also includes certain termination events, including where the restructuring has not completed by the agreed long-stop date.