Resolute Investment Managers and first lien lenders cut a deal with the borrower's second lien holders over the weekend, under which the junior creditors will now receive 13.5% of the organized equity, subject to dilution from a management incentive program (MIP), said two sources familiar with the matter.

Under the reworked terms, first liens will receive up to 86.5% of the equity in the reorganized asset manager, subject to dilution by the MIP, the sources noted. First lien lenders are also slated to receive USD 350m in take-back loans at SOFR+ 650bps and a 5% PIK consent fee, they added.

The agreement is receiving broad support from its first and second lien lenders, the sources said.

In the prior iteration of the deal, first liens were slated to receive up to 95% of the equity along with the take-back paper, while second lien lenders were in line to collect up to 5% of the reorg equity, as reported. 

The prior restructuring deal, although supported by first lien loan holders, was not backed by the second lien group.

The Kelso & Co-backed investment management company has been under pressure to address a loan maturity wall starting in 2024 amid deteriorating operating performance.

The issuer’s USD 544m first lien loan due 2024 was last quoted 72.8/75, in line with recent trades, according to Markit. The USD 89m second lien due 2025 is thinly traded, but was last quoted 60/63 on 9 June, according to Markit.

The first lien group, organized with Gibson Dunn and Ducera, initially approached Kelso – which has taken out a number of dividends from the company – with a proposal for Kelso to inject funds into Resolute, but the request was met by staunch opposition from the sponsor, as reported.

For its part, Resolute is working with Debevoise & Plimpton and Evercore as advisors, while second lien holders are advised by Houlihan Lokey.  

Resolute declined comment. Houlihan did not return requests for comment.