A group of lenders under digital advertiser Catalina Marketing’s $1.1 billon first lien term loan B facility due 2021 has organized with Jones Day as restructuring counsel and will hold pitches for financial advisors on Friday, according to sources. The lenders’ search for legal and financial advice on Catalina’s capital structure follows that of the company, which has brought on Weil Gotshal as legal counsel and Centerview Partners as financial advisor, sources add.

Creditors are anticipating that Catalina will face a liquidity crunch in April 2019 when mandatory cash payments become due on the company’s holdco PIK / toggle bonds, sources say. Those notes had accreted amounts outstanding of $328 million as of June 30, 2017, according to a Moody’s Investors Service report from October 2017. In addition, lenders under Catalina’s $460 million second lien term loan due 2022 recently selected Paul Weiss and PJT Partners as their legal and financial advisors, respectively, sources say.

Concerns about the company’s ability to address its capital structure grew after the release of fiscal 2017 fourth-quarter and full-year results this week. The Berkshire Partners-owned Catalina, which is a subsidiary of Checkout Holding Corp., provides personalized digital media marketing and advertising to retailers and consumer packaged goods, or CPG, brands, and it is therefore exposed to the industry-wide challenges in retail. On a call Tuesday to review fiscal 2017 fourth-quarter and full-year results, Catalina’s CEO Andy Heyman said that results for the quarter ended Dec. 31 “fell well below” expectations: Total revenue of $145 million was down 12.2% compared with the same period a year earlier, and EBITDA of $50.4 million was down 26.1% from a year earlier.

The first lien term loan and second lien term loans were both quoted down about 7 points on Wednesday to 69/71 and 24/27 respectively, according to a trading desk.

Despite four of the company’s markets (U.S. emerging brands, U.S. retail, Europe and Japan) showing year-over-year revenue growth in the high single digits on a consolidated basis, “a handful of customers” in the company’s largest market - U.S. established brands - reduced their spending with Catalina. The “power” of Catalina’s on-demand marketing service provides brands and retailers with flexibility, but that flexibility can also act as a short-term savings lever for those companies during challenging times within their own businesses, the CEO explained. At year-end, the company was in more stores than it was in at the end of fiscal 2016, but Catalina also lost its first meaningful retail customer when the parties were unable to come to a deal on terms, Heyman said.

Looking ahead to fiscal 2018, the company is planning for the “possibility” of needing to absorb continued revenue challenges with some of Catalina’s largest customers “especially in the opening months of the year,” according to the CEO. This “could mask” growth at the rest of the company, but management said it is focusing on a spending plan to mitigate that risk as Catalina works to diversify its revenue streams. Company CFO Shelly Schaffer elaborated on this point, saying that Catalina is seeking to expand its marketing as a service in order to help expand revenue beyond typical promotional streams and in an effort to reduce dependency on large CPG customers.

As it works toward that effort, Catalina has been developing into a “flatter, leaner” organization through a streamlining of processes and increases in automation, among other efforts, Schaffer said. The company recorded its first “measurable success” in the fourth quarter by posting savings that approximate $10 million on an annualized basis, the CFO said. She added that the company is targeting incremental savings of between $10 million and $20 million by the end of fiscal 2018 that the company expects will come from sales, corporate and organizational efficiencies and product optimization. This translates to annualized savings in the “general range” of $30 million, Schaffer said, adding that savings will remain a “major” priority through the balance of fiscal 2018 and into 2019.

Although continued pressure on the U.S. established brands market could lead to sequential declines in EBITDA and revenue dollars in the first quarter of 2018, the CEO said on the call that the company expects full-year 2018 EBITDA to be within single-digit percentage points “in either direction” of fiscal 2017 EBITDA; full-year 2017 EBITDA totaled $173.2 million, down 20.8% compared with 2016. Catalina reported total cash of $32.2 million, compared with $46.5 million at the end of the previous year, and capital expenditures totaled $38 million in the year, down from $42.2 million in fiscal 2016. There was $15 million drawn on the company’s revolving credit facility at the end of the year, management said on the call.

Jones Day, Catalina, Berkshire Partners, Weil Gotshal, Centerview Partners, Paul Weiss and PJT Partners did not immediately respond to request for comment.