Monitronics International Inc. announced on Tuesday that it has entered into a restructuring support agreement that would reduce the home security and alarm monitoring company’s debt by about $500 million as part of a partially pre-packaged reorganization through a chapter 11 structure, the Dallas Business Journal reported. The agreement is with Monitronics’ lenders, who hold approximately 78% of the Farmers Branch company’s debt, and the holders of a majority of its equity. Funds managed by Monarch Alternative Capital and Invesco Senior Secured Management Inc. are the largest lenders and will become the new principal equity owners. In addition to creating an expedited restructuring deal to lower Monitronics’ debt, the arrangement is expected to provide more financial flexibility and support for the firm to execute its business plan. On or around May 15, Monitronics, the firm behind Brinks Home Security, plans to implement the restructuring through the partially pre-packaged chapter 11 protocol in the Southern District of Texas. Monitronics, which has already obtained the necessary support from stakeholders, plans to emerge from chapter 11 proceedings within about 46 days of filing should the bankruptcy court approve its plan. Monitronics has already received commitments for about $387 million in new financing from existing lenders during the chapter 11 cases. That includes funds for the chapter 11 process, including payments of employee wages and benefits, suppliers, partners and vendors; and funds to refinance Monitronics’ existing superiority revolving credit facility and term loan.
