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Springs Window Fashions lenders form group

Creditors for Springs Window Fashions have formed a group and tapped Ropes & Gray as legal advisor amid the company’s declining performance, according to two sources familiar with the matter.

The window covering producer is the latest Clearlake Capital portfolio company to come under pressure from a combination of high interest rates and declining sales.

Springs Window posted 1Q24 earnings in late May that showed sales declined 8.9% to USD258m and adjusted EBITDA dropped 18.8% to USD 44m. Liquidity remained solid at around USD 135m, including USD 16m of cash, according to a third and a fourth source familiar with the matter.

The company did not provide any guidance on a call with creditors but acknowledged that weak demand is continuing, and that ongoing soft near-term financial performance was likely, according to the third source, who expects total net leverage to approach 11x in late 2024.

Moody’s downgraded Springs Window to Caa1 late last year, saying the company had an unsustainable capital structure and that “declining volumes and weakening demand trends will make it challenging to meaningfully improve revenue, the profit margin and cash flows over the next 12 months.”

The company’s USD 2bn term loan due 2028 was quoted 85.182/86.432 on Tuesday, according to MarketAxess. The USD 625m 6.5% senior unsecured notes due 2029 last traded at 58.5, according to MarketAxess.

Clearlake has faced problems with several portfolio companies that have led the financial sponsor to execute liability management exercises. Wheel Pros and Pretium Packaging completed deals last year, while Mold-Rite Packaging, also known as Valcour, recently struck a deal with first and second lien lenders to exchange debt at a discount.

Representatives of Springs Window, Ropes & Gray, and ClearLake did not return requests for comments.