Sungard Availability Services Capital – Notifies Court of May 3, 2019 Plan Effective Date, Announces Appointment of New CEO

May 3, 2019 – The Debtors notified the Court hearing the Sungard Availability Services Capital cases that their prepackaged Chapter 11 Plan had become effective as from May 3, 2019 [Docket No. 50]. The Court had previously confirmed [Docket No. 46] the Plan on May 2, 2019, only 22.5 [record breaking] hours after the Debtors had filed their Petition. This is the second time in four months that Judge Drain of the Southern District of New York has presided over a record breaking Chapter 11 process, with the sub-24 hour Sungard bankruptcy eclipsing the mark set by Fullbeauty in the beginning of February. Bragging rights will go to Kirkland & Ellis, Alix Partners and Prime Clerk (Centerview Partners joining this trio on the Sungard transaction) who teamed up on both deals and will be able to provide an impressive pitch for prospective clients looking for teams with a proven ability to deliver record-breaking speed.

In a press release announcing the (now former) Debtors’ emergence from Chapter, Sungard stated,  “On May 1, 2019, the Company briefly put its U.S. entities into Chapter 11 to effectuate its consensual agreement with a majority of its creditors to reduce Sungard AS' overall debt. The restructuring reduced the Company's debt by over $800 million and includes $100 million of new liquidity provided by the Company's creditors. With the Company's Plan of Reorganization confirmed yesterday by the U.S. Bankruptcy Court for the Southern District of New York, Sungard AS emerges from this process as a much stronger company with a sustainable capital structure to support the Company's investment and growth plan and to continue to service existing and new customers well into the future.”

Sungard AS also announced the appointment of Michael (Mike) K. Robinson as the Company's new Chief Executive Officer (CEO). Mr. Robinson will succeed Andrew A. Stern, who served as CEO for nine years. The reorganized Company's new ownership and largest shareholders now include: Angelo, Gordon & Co., LP; The Carlyle Group Global Credit; FS Investments and GSO Capital Partners LP, all of whom will have representation on the restructured Company's Board of Directors, along with Mr. Robinson.  

On April 2, 2019, the Wayne, PA-based Debtors announced that they had entered into a consensual agreement with a majority of its creditors to reduce Sungard AS’ debt by over two-thirds. The Debtors’ press release stated, “The restructuring contemplated by the Restructuring Support Agreement (RSA) is funded by a $100 million credit facility, which will provide the liquidity necessary to continue to implement the Company’s business plan, including funding working capital and operational and capital expenditures during the expedited restructuring process. Once the restructuring is complete, Sungard AS’ creditors will own the Company’s equity.”  

Plan Overview

In documents filed with the Court, the Debtors provided the following detail as to the Plan: “The Plan implements a pre-packaged restructuring agreed to by and among the Debtors and the Debtors’ major stakeholders, including Holders of more than 75% in amount of the Credit Agreement Claims, Holders of more than 85% in amount of the Notes Claims, certain of their respective affiliated entities and investment funds, and the Debtors’ prepetition equity Sponsors, which will result in a significant deleveraging of the Debtors’ capital structure, as reflected in the chart below:

The anticipated benefits of the Plan include, without limitation the following:

1. conversion of approximately $1,006 million of Credit Agreement Claims (which include accrued and unpaid interest through May 1, 2019 and approximately $155 million on account of the Acceleration Makewhole Premium) to a combination of approximately 89% of the equity in the Reorganized Sungard AS and a $300 million new senior secured term loan facility (the “New Term Loan”); provided, however, that the Acceleration Makewhole Premium Settlement Amount (as defined below) which otherwise would have been distributable to the Holders of Allowed 2022 Term Loan shall instead be distributed Pro Rata to the Holders of Notes Claims;
2. conversion of approximately $447 million of the Notes Claims (which include accrued and unpaid interest through May 1, 2019) to approximately 11% of the equity in the Reorganized Sungard AS plus each Holder of a Notes Claims shall receive such Holder’s Pro Rata share of and interest in the Acceleration Makewhole Premium Settlement Amount;
3. prompt emergence from chapter 11;
4.  access to capital in the form of a new first lien priority revolving credit facility with aggregate commitments of up to $50 million (the “Exit Revolver Facility”);
5. a debtor-in-possession financing facility in the aggregate principal amount of up to $100 million that will convert, upon satisfaction of the applicable conditions, into an exit facility (the “Exit Term Loan Facility”), which facility shall be secured by liens on all Collateral (as defined in Exhibit D-1 to the Restructuring Support Agreement (the “Exit Term Sheet”)), subject to (i) first priority on all Term Priority Collateral (as defined in the Exit Term Sheet) and (ii) second priority on all Revolver Priority Collateral (as defined in the Exit Term Sheet) ;and
6. the New Term Loan in the aggregate principal amount of $300 million, which shall be junior to both the Exit Revolver Facility and the Exit Term Loan facility.

Plan Voting Results

The Debtors’ claims agent provided the following detail as to the two classes that were entitled to vote under the Plan [Docket No. 18]:

• Class 3 (“Credit Agreement Claims”) – 217 claims holders representing $814.3mn (100% in amount) and 100% in number voted in favor of the Plan.
• Class 4 (“Notes Claims”) – 63 claims holders representing $368.6mn (100% in amount) and and 100% in number voted in favor of the Plan.

Pre-petition Equity Holders (5% or more)

The following is a summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement):

• Class 1 (“Other Secured Claims”) is unimpaired, presumed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
• Class 2 (“Other Priority Claims”) is unimpaired, presumed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
• Class 3 (“Credit Agreement Claims”) is impaired and entitled to vote on the Plan. Expected recovery is 50% to 73%.
• Class 4 (“Notes Claims”) is impaired and entitled to vote on the Plan. Expected recovery is 7% to 14%.
• Class 5 (“General Unsecured Claims”) is unimpaired, presumed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
• Class 6 (“Section 510(b) Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. Expected recovery is 0%.
• Class 7 (“Intercompany Claims”) is unimpaired / impaired and not entitled to vote on the Plan. Expected recovery is 0%/100%.
• Class 8 (“Intercompany Interests”) is unimpaired / impaired and not entitled to vote on the Plan. Expected recovery is 0%/100%.
• Class 9 (“Interests in Sungard AS”) is impaired, deemed to reject and not entitled to vote on the Plan. Expected recovery is 0%

About Sungard Availability Services

The Debtors describe themselves as follows: “Sungard Availability Services is a leading provider of critical production and recovery services to global enterprise companies. Sungard AS partners with customers across the globe to understand their business needs and provide production and recovery services tailored to help them achieve their desired business outcomes. Leveraging more than 40 years of experience, Sungard AS designs, builds and runs critical IT services that help customers manage complex IT, adapt quickly and build resiliency and availability.”

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