Crossmark Holdings, Inc. Out-of-Court Restructuring
7/26/2019

Davis Polk advised the administrative agent and certain revolving lenders under Crossmark Holdings, Inc.’s first-lien credit agreement in connection with the out-of-court restructuring of Crossmark’s $455 million first-lien term loan credit facility, $52.5 million first-lien revolving credit facility and $90 million second-lien credit facility. The out-of-court restructuring became effective on July 26, 2019. 

Davis Polk has been advising the administrative agent and the revolving lenders in Crossmark’s restructuring process since early 2018. On December 31, 2018, Crossmark closed a $30 million bridge facility and restructuring support agreement with certain stakeholders, including the revolving lenders, which provided for a permanent reduction to zero of the revolver lenders’ remaining commitments under the first-lien credit agreement, leaving approximately $23.5 million of outstanding revolving loans supporting the company’s letters of credit. 

Pursuant to the terms of the out-of-court restructuring, the first-lien term lenders received their pro rata share of a $75 million take-back term loan facility and 100% of the common stock of the reorganized Crossmark in exchange for the discharge of the existing first-lien loans, the revolving lenders received a $23.5 million new letter of credit sub-facility that ranks pari passu with the take-back term loan, and the second-lien lenders received warrants. Crossmark also entered into a $75 million asset-based revolving facility that repaid in full the $30 million bridge loan in cash. Under the new credit agreement, the revolving lenders, as letter of credit lenders under the take-back term loan agreement, will receive class voting rights when letters of credit are drawn and cash collateralization in the event of mandatory and voluntary prepayments and amortization when drawn. 

Headquartered in Plano, Texas, Crossmark is a consumer goods sales and marketing services company. Crossmark’s sales agency provides sales and support services to manufacturers, as well as software development and store remodels to retailers. Its marketing services include in-store events, data collection and analysis and shopper marketing for retailers. 

The Davis Polk restructuring team included partner Damian S. Schaible, counsel Jon Finelli and associates Jonah A. Peppiatt, Xu Pang and Alexander K.B. Shimamura. Counsel Alon Gurfinkel and associates Omer Harel and Summer Xia provided tax advice. Members of the Davis Polk team are based in the New York and London offices.