Catalina intends to ’emerge’ from bankruptcy

St. Petersburg-based marketing firm Catalina, which recently filed for Chapter 11 bankruptcy protection for a second time within five years, plans to emerge from its financial struggles through a new restructuring plan. 

The company, which provides a data-driven omnichannel advertising platform to retailers, announced April 28 that the federal court had confirmed its prepackaged plan of reorganization. 

As part of its overall strategy and restructuring plan, it plans to sell its Japanese subsidiary, Catalina Marketing Japan K.K.

It will sell the Japanese operations to Yosemite 2 K.K., an entity funded by Tokyo-based private equity firm D Capital Inc., and “successfully emerge from Chapter 11,” according to a prepared statement.

The plan echoes a similar process the company followed in 2018, cutting its $1.9 billion debt to $280 million. Catalina now plans to slash its $370 million debt to roughly $110 million and will reinvest some of the proceeds from the Japan subsidiary sale. 

Catalina attributes the recent financial woes to headwinds caused by the Covid-19 pandemic, resulting in global supply chain disruption and inflation rates, “dampening the need for coupons and discounts to attract customers,” according to a court filing. 

In conjunction with the pending transaction, the firm said it has also reached an agreement with the majority of Catalina’s lenders to “substantially reduce the company’s debt by initiating a voluntary, prepackaged financial restructuring in the United States.”

Catalina expects to complete the sale and balance sheet restructuring plans in 30 days. The sale is subject to Catalina’s successful completion of the financial restructuring terms. The company said it expects the Japan K.K. entity to retain the currently employed workers following the transaction. 

Catalina’s operations in the U.S., Costa Rica, Europe and Japan will continue as usual throughout the restructuring process without interruption as it has “ample financial liquidity to operate normally through this process and beyond,” according to the company’s published restructuring plan. 

“We are pleased to have achieved this key milestone in our financial restructuring. Catalina will emerge from this process as a stronger partner to our customers, with greater strategic focus and resources to continue innovating and unlocking relevant new data-driven solutions that deliver meaningful value for all stakeholders,” Catalina CEO and President Wayne Powers said in the prepared statement.

“We were able to achieve this outcome on an accelerated basis thanks to the overwhelming support of Catalina’s lenders and the continued trust of our customers, partners and vendors,” Powers continued, thanking his team and customers. “With this solid financial foundation in place, we are well positioned to grow Catalina’s business in the years ahead by focusing on critical investments in AI [artificial intelligence]- enabled data science capabilities.”