Double Dips To Double-Doubles: Liability Management Transactions Have Arrived – What Opportunities Are There In Canada?

In a previous article available, we considered the prevalence of "liability management" activity — often referred to as "LMEs" (liability management exercises) or "LMTs" (liability management transactions) — in the US and European markets. We discussed two common types of LMEs and how permissive covenant packages and increasingly onerous costs of formal bankruptcy proceedings have changed the default and pre-default landscape in the US and Europe.¹

Recent data suggests that half of all global defaults involved some type of private workout or LME, including "distressed exchanges."² For Canadian borrowers tapping the US and European debt markets, LMEs are already here. Mitel, a Canadian company, implemented an LME last year. Conuma Resources, a coal mining business headquartered in British Columbia, effected a non-pro-rata uptier of its senior bonds just last month. Conuma appears to be one of the first Canadian businesses with operations primarily in Canada to