Distressed-debt specialists Oaktree Capital Management and Anchorage Capital have acquired positions in First Brands Group’s debtor-in-possession (DIP) financing as the auto parts supplier races to secure additional liquidity, according to a report by Bloomberg.
The $1.1bn DIP loan, which ranks senior in bankruptcy, has been trading at distressed levels, reflecting investor expectations that new capital will be required to keep First Brands operational. The company has warned it could exhaust its cash reserves by the end of January without a fresh capital injection.
The report cites unnamed source familiar with the matter as saying that Oaktree and Anchorage joined the bankruptcy financing as First Brands continues negotiations with existing lenders over an additional loan. A key issue in discussions has been the advisory fees the company has accumulated since filing for Chapter 11 in September, amid efforts to unwind complex factoring transactions that left it heavily leveraged.
First Brands had sought as much as $800m in new funding in December. The shortfall threatens to force shutdowns or sales of certain business units if a solution is not reached. Approval of the new capital requires consent from two-thirds of the current rescue loan holders, advisers told lenders last month.
