- Warburg acquired a majority of Crossmark in 2012
- Crossmark’s $52.5 mln revolver is due in June, while a $402 mln loan expires in December
- Warburg is fundraising for its latest flagship, initially targeting $13.5 bln
Looming debt maturities are likely to push Crossmark Holdings Inc, a portfolio company of Warburg Pincus, to restructure sometime in the next year, according to Standard & Poor’s.
The Plano, Texas, marketing service company entered into a restructuring support agreement with its lenders in December, S&P said in a Jan. 17 report. The banks also agreed to provide a $30 million bridge loan to help Crossmark until its restructuring is consummated, the credit-rating company said.
“A debt restructuring or default in the next 12 months is a virtual certainty, as evidenced by the RSA,” S&P said. “Absent a restructuring, the company faces a heavy debt burden, thin liquidity and looming maturities.”
Founded in 1905, Crossmark provides sales and marketing services for consumer-goods companies. It employs more than 40,000 people in the U.S., Canada, Australia and New Zealand. Warburg Pincus acquired a majority of the company in 2012. A year later, in 2013, Crossmark acquired Marketing Werks Inc.
Crossmark is struggling against industry headwinds and its financial-sponsor ownership, both of which have contributed to its weak financial profile, Moody’s said in August. Debt-to-EBITDA stood at 10.9x, including lease adjustments, as of March 30.
The company is facing debt maturities. A $52.5 million revolver is due in June, while a roughly $402 million first-lien term loan expires Dec. 21, 2019, Moody’s said.
Crossmark’s debt issues aren’t new. The company’s lenders were considering a sale of the company along with a refinancing or a potential in-court restructuring, Reorg Research reported in April 2018.
The company was also running a sale process through B of A Merrill Lynch, the story said.
A possible Crossmark restructuring comes as Warburg, which is one of the oldest private equity firms, was very active in 2018. In November, Warburg led a $150 million Series B for Geek+, invested $181 million in Weave Co-Living and completed its buy of DKSH’s healthcare business in China.
The New York firm was also fundraising for its latest flagship last year, seeking $13.5 billion, Buyouts reported. The firm held a $14 billion first close in November for Fund XIII and could raise as much as $17 billion, Bloomberg said.
Executives for Warburg and Crossmark could not be reached for comment.
Action Item: For more information, go to: www.warburgpincus.com/