Outdoor advertiser Gallery completes debt restructuring
MOSCOW. Aug 19 (Interfax) - Russian outdoor advertising concern Gallery has completed a debt restructuring, the company said in a press release.
"Gallery is pleased to announce the successful completion today of the restructuring of the Group's financial liabilities (the "Restructuring") in accordance with the agreement reached on 6 October 2009 with a committee representing the majority of holders of the $175 million 10 1/8 per cent. senior secured notes due 2013 (the "Committee"). The Restructuring was implemented by way of two schemes of arrangement in the English courts (the "Schemes"). The Schemes were approved by the Scheme Creditors on 18 May 2010 and sanctioned by the High Court of Justice of England and Wales at a fairness hearing held on 26 May 2010," the press release says.
"Under the terms of the Restructuring, the total indebtedness of the Group was reduced from $342.2 million to $100.3 million," it says.
"[H]olders of $161.5 million face value of the senior secured notes received 68 per cent. of the equity in a new holding company, Gallery Media Holding Limited ("Newco"), and 90 per cent. of $100.3mm of 10 per cent. new notes due 2015 (the "New Notes"). $13.5 million face value of old senior secured notes held by Group were cancelled as part of the Schemes."
"Funds advised by Baring Vostok Capital Partners Limited and a company owned by Anatoly Mostovoy have invested an additional $5.0 million in Newco and will continue to provide ongoing support to the new Group in return for 30% of the equity of Newco and $10.0 million of the New Notes."
"The Committee allocated 2 per cent. of Newco equity to a third party who assisted the negotiating process in the lead up to the Restructuring. J.P. Morgan and Latham & Watkins acted as advisors to Gallery. Jefferies and Cadwalader Wickersham & Taft advised the Committee."
"Improved market conditions in 2010, combined with the positive effects of on-going comprehensive cost-cutting efforts and a significant deleveraging of the balance sheet, have improved the Group's liquidity position and will put it on stable financial footing going forward," the press release says.
Gallery posted a net loss of $40.1 million in the first half of 2009 compared with a net profit of $3 million in the same period of 2008. Revenue totaled $46.4 million, down from $99 million in January-June 2008. The company blamed the losses on the decline in advertising brought on by the global financial crisis and the 28% devaluation of the ruble relative to the dollar.
Gallery had $27 million in revenue in the first quarter of 2010, according to unaudited financials. That is 32% more than in the same quarter of 2009. The company cut costs 6.2% to $14.7 million, excluding costs to acquire new advertising space. EBITDA in the first quarter totaled $3.406 million compared with negative $4 million a year earlier. The EBITDA margin rose to 13% from negative 20% in the first quarter of 2009.
Prior to the restructuring, Baring Vostok Capital Partners, the European Bank for Reconstruction and Development (EBRD) and Morgan Stanley Principle Investments owned a combined 74.5% of shares. Gallery's founders and senior management owned 25.5%.