Rekeep Refinancing: A Win for Lender Protections

This week’s refinancing for Rekeep stands out as an excellent example of negotiating strong lender protections. In this blog, we break down the key features that make this deal better for investors.

Asset Disposal Protections

A new mandatory redemption clause requires Rekeep to use proceeds above €15 million from asset sales to repay notes. This addition ensures that leverage reduces when assets are sold. The deal sweetens the pot for lenders with a par plus 33% of the coupon upside.

Dividend Restrictions

The refinancing includes robust dividend protection measures. A threshold of 2x Consolidated Net Leverage Ratio is required before the borrower can make certain Restricted Payments. This ratio acts as a control mechanism for:

• Dividends from the builder basket
• General Basket Restricted Payments
• Certain Permitted Investments

The deal also removed the post-IPO dividend basket and added a J. Crew Blocker.

Receivables Protection

A new Liens on Receivables covenant requires Rekeep to secure notes equally and rateably when securing other debt on receivables. This protection addresses a common concern, as companies often use receivables-based debt for raising funds.

Market Impact

These enhanced protections mark a shift from recent market trends. While many refinancing deals have added borrower flexibility, Rekeep's structure prioritizes lender security through specific, measurable requirements.

This refinancing presents a blueprint for balanced debt structures, demonstrating how companies and lenders can establish firm restrictions on value loss while maintaining business flexibility.

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