The bank debt for Mayflower Corp. came under intense pressure last week as the company announced that it was appointing Deloitte & Touche as administrators. Earlier last week, the company announced that negotiations with its lenders were likely to fail. As a result, the bank debt levels plummeted from the 40s into the high teens to high 20s level over the course of the week. There were rumors of trades in the 22 and 28 contexts, but these trades could be confirmed. Some people believe the market may have overreacted to the news, said one distressed loan source.
Calls to Nick Dargan, who is heading the administration from Deloitte, were referred to a spokeswoman. The spokeswoman said the company was still in the early stages of the administration and that the administrators were currently assessing the business. No more details could be determined.
The company's Mayflower Vehicle Systems, TransBus International, and its management services subsidiaries will be a part of the insolvency proceedings. Mayflower's insolvency comes only days after the company disclosed a management shakeup and the discovery of accounting irregularities at its TransBus unit. At first, distressed loan sources were divided on where the bank loan paper should be valued, with some quoting it as low as the 25-35 range and others as high as the 30-40 context.
Mayflower only recently renegotiated its credit facility in December, putting in place a £160 million loan led by Credit Suisse First Boston and The Royal Bank of Scotland. But the company continued negotiations with its lenders who had agreed to provide additional facilities to Mayflower while the parties concluded their negotiations. The company had been in negotiations over the £160 million facility as well as other facilities, noted a Mayflower spokeswoman. But, "The price ticket to bail this [company] out is too expensive," said one buysider.
Mayflower bank debt had already been softer over the last month after the company warned that its year-end results were likely to miss market expectations. At that time, the bank debt had been trading in the low-to-mid 50s, but market participants believed that it would settle well in the 40s (LMW, 3/15).