Shearman & Sterling represented Cinram, Inc. and Cinram (U.S.) Holding's Inc., as Borrowers, and numerous Cinram affiliates, as Guarantors, in a comprehensive refinancing and recapitalization transaction.

The transaction involved: (1) bifurcating Cinram’s roughly $367 million revolver and term loans agented by JPMorgan Chase Bank, N.A. into first and second lien loans, with a $30 million paydown of the amended first lien loan and converting $90 million into a new mandatorily exchangeable second lien loan; (2) renegotiating Cinram’s domestic and international commercial agreements with one of its largest customers; and (3) entering into numerous accommodation agreements with the customer and the lenders.

These accommodation agreements include an Access Agreement, a Non-Disturbance Agreement governing the relative rights of the lenders and the customer, and a Lease-Sublease arrangement for one of Cinram’s largest U.S. facilities. Also in connection with the recapitalization, the lenders were granted approximately 10% of the equity of the parent fund, a right to receive an additional 5% of the equity of the parent fund on June 30, 2011 if the second lien loan remains outstanding, and a right to convert the $90 million second lien loan into equity of the parent fund to the extent that the second lien loan remains outstanding on December 31, 2011. In order to achieve this recapitalization out of court, Cinram successfully obtained 100% consent from a widely held lending syndicate.

Cinram is one of the world's largest providers of pre-recorded multimedia products and related logistics services. With facilities in North America and Europe, Cinram manufactures and distributes pre-recorded DVDs, audio CDs, and CD-ROMs for motion picture studios, music labels, publishers and computer software companies around the world. Cinram also provides distribution and logistics services to the telecommunications industry in North America through its wireless subsidiaries.

The Shearman & Sterling transaction team was led by partner Douglas Bartner (New York-Bankruptcy & Reorganization) and counsel Jill Frizzley (New York-Bankruptcy & Reorganization) and included partners Michael Baker (New York-Finance) and Don Lonczak (Washington, DC-Tax), counsel Gina Love (New York-Real Estate), and associates Anne Bahr (New York-Bankruptcy & Reorganization), Osilama Innih (New York-Finance), Thaddeus Pitney (New York-Capital Markets), Asher Richelli (New York-Finance), Christopher Ross (New York-Finance), Jeffrey Tate (Washington, DC-Tax) and Lawrence Taylor (New York-Real Estate).