BrightHouse Group Completes Financial Restructuring

February 2, 2018

S&C advised the ad hoc committee of noteholder-creditors on the U.K. restructuring of BrightHouse Group plc (BHG).

BHG completed its financial restructuring on February 2 through a consent solicitation process. BHG also obtained full authorization from the U.K. Financial Conduct Authority (FCA). BHG is the leader in the rent-to-own market in the United Kingdom with 283 retail stores, selling home furniture, appliances and computing to low-income and credit-impaired consumers who have limited access to traditional financing alternatives.

BHG had notes due in May of this year which it would not have been able to refinance. In March 2015, in order to address concerns raised by the FCA, BHG implemented an affordability action plan which caused a material decline in BHG's trading performance in 2016 and 2017 and a refunds program to return £14.8 million to approximately 249,000 customers. This led BHG to engage in restructuring negotiations with its noteholders. S&C advised the ad hoc committee, and eventually the committee comprised more than 90 percent of the BHG noteholders. The BHG restructuring was implemented by way of an exchange offer and consent solicitation by BHG to the existing noteholders for an exchange of the existing £220 million 77/8% notes due 2018 for (a) £115,091,000 9.000% senior secured notes due 2023 which are PIK for the first year, and subsequently five percent PIK and four percent cash-pay interest (with a PIK toggle based on cash balance) thereafter; and (b) either (i) cash consideration at a price of £245 per £1,000 principal of existing notes; or (ii) shares issued by BrightHouse Topco Limited, a newly incorporated holding entity for the BHG group in lieu of cash consideration (the New Shares). The cash consideration was funded by holders of existing notes who subscribed for additional New Shares.

Following the completion of the restructuring, 97.0 percent of the share capital of BrightHouse Topco Limited was held by certain holders of the existing notes, with the remaining three percent share capital held by Vision Capital, the existing sponsor of BHG.

The S&C team was led by Chris Beatty, Christopher Howard, Presley Warner and Ben Perry, along with Lester Su, Karla Mullins, Anna Chirou, Abigail McIntosh and Maria Lacayo. Juan Rodriguez and Oscar Hayward advised on antitrust matters, and Andrew Thomson, Emma Hardwick and Angus Hayhow advised on U.K. tax matters. Eric Wang, Michael Orchowski and Slki Hong advised on U.S. tax matters.