LOS ANGELES — VER announced that, as part of a comprehensive transaction supported by its second lien lenders, including funds managed by GSO Capital Partners, it has entered into an agreement to merge with an entity controlled by Production Resource Group LLC (“PRG”). To facilitate the implementation of this pre-negotiated transaction, VER filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware on April 5, 2018. These filings only affect the Company’s North American operations.
More details from VER (www.ver.com):
By uniting, PRG and VER will meet evolving client needs and offer solutions, resources and expertise in ways neither company could achieve independently. Clients will have access to an extraordinary array of equipment and services, and the most talented team in the industry.
VER will continue operating in the normal course during the Chapter 11 process. Clients who have on-going productions as well as new clients who sign on with the company during the process, can be confident that their project will not be interrupted. All employees will receive their usual wages and benefits, and VER expects to work constructively with its suppliers as usual. Additionally, because VER has already reached agreements with certain key stakeholders on the framework of its restructuring plan, VER expects to emerge from Chapter 11 quickly.
“Entering into this agreement and undertaking the court-supervised restructuring process will greatly reduce VER’s outstanding debt and position the company for the merger with PRG,” said Digby Davies, CEO of VER. “VER remains a strong business with more customers than ever before, and a customer satisfaction rating that is highest in the industry. The actions announced today will provide a stronger capital structure and sufficient cash to fund operations.”
Davies continued, “During the process we will continue to provide our clients with the largest inventory of equipment and unmatched reliability and expertise. Clients will work with their trusted VER representative and their projects will not be interrupted.”
“We are pleased to enter into this agreement with VER and partner with GSO,” said Jere Harris, Chairman and CEO of PRG. “VER’s terrific client base and vast product and service offerings are a natural complement to our business. Upon completion of the transaction, we look forward to working closely with the talented VER team to strengthen our business and deliver even greater value and service to our clients.”
In conjunction with the proposed transaction, VER has received commitments from existing lenders, including funds managed by GSO Capital Partners, for up to $364.7 million in debtor-in-possession (DIP) financing to support its continued operations during the Chapter 11 process. VER has filed a number of customary first day motions with the Bankruptcy Court seeking authorization to continue to support its business operations during the transaction process, including authority to continue to pay wages and provide health and other employee benefits without interruption and to continue programs which support VER’s service to its customers.
VER intends to pay suppliers in full under normal terms for goods and services provided after the filing date of April 5, 2018. Additional information is available on VER’s website at VER.com/restructure. Court documents and additional information can be found at a dedicated website administrated by VER’s claims agent, KCC, at www.kccllc.net/VER, or by calling KCC at 877-634-7163 (toll free) or 424-236-7219 (if outside of the United States or Canada).
Kirkland & Ellis LLP and Klehr Harrison Harvey Branzburg LLP are serving as VER’s legal counsel, AlixPartners LLP is serving as its restructuring advisor and PJT Partners is serving as its financial advisor. Skadden, Arps, Slate, Meagher & Flom LLP, and Perella Weinberg Partners are serving as advisors to Bank of America Merrill Lynch. FTI Consulting and Morgan, Lewis & Bockius LLP are serving as advisors to GSO Capital Partners.
Also on April 5, 2018, VER CEO Digby Davies issued the following statement:
I would like to update you on an important step that VER has taken in order to position the Company for future success.
VER announced today that it has entered into an agreement to merge with Production Resource Group LLC, (“PRG”) and also filed voluntary petitions for reorganization under Chapter 11 to implement the agreement.
We believe that undertaking the court-supervised restructuring process is the best course of action for VER. Despite a record number of new clients and customer satisfaction ratings that are highest in the industry, VER has struggled due to an inability to service its current debt load. In entering this reorganization, we have reached an agreement with our existing stakeholders to significantly reduce outstanding debt, and have raised financing to provide up to $64.7 million in new liquidity to allow us to operate successfully as we undergo this exciting transition.
The Chapter 11 process will provide greater stability and the opportunity to increase investment in the business. In merging with PRG, the combined entities will be able to meet evolving client needs and offer solutions, resources and expertise in ways neither company could achieve independently.
Importantly, VER’s operations will continue in the normal course during this process — all existing productions or new projects that are signed on during the process will not be interrupted.
A few key things you need to know:
We expect that this process will be seamless for our clients and will result in no disruption to our operations. VER has always been known for reliability and our clients can continue to rely upon us. Additionally, we will maintain our commitment to provide extraordinary service and competitive pricing.
We intend to move through this financial restructuring process as expeditiously as possible. We anticipate that the restructuring process will take approximately 4-6 months and we expect to emerge from Chapter 11 with a new capital structure, sufficient cash to fund operations and the ability to access capital to fund new growth initiatives.
A merger of VER and PRG will give you even more opportunities to be successful. The combined businesses will have by far the most experienced team, and the broadest range of production equipment and services in the world.
Until the restructuring process is complete, VER and PRG will continue to operate as two separate companies and it will be business as usual.
We will keep you informed as we move forward. If you have any questions, please reach out to your VER contact. You can also visit VER.com/restructure for more information.
We value our relationship with you and are confident that by working together, we will emerge from this process an even stronger company. Thank you for your continued support.
Sincerely,
Digby Davies
Chief Executive Officer
